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This is the official consulting case book from London Business School.
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When applying to work with a consulting firm, you will go through a multi-stage interview process. Most firms’ interviews follow a similar pattern. A couple of regular recruiters at London Business School, notably McKinsey and 2020 Delivery, have a written problem solving test as a screening round before the first round of interviews. The first round will generally consist of two interviews with consultants at the firm you are applying to join, each lasting around 30min – 1 hour. Case and fit interviews are usually combined, although they may be separate (notably at McKinsey). First round interviews are often held on the London Business School campus. Often called ‘ decision round ’, round 2 will be conducted along very similar lines to Round 1, but will generally be held at the office to which you are applying. Increasingly, recruiters are using video-conference where students are applying to remote offices from London. The interviewers will probably be more senior than those who interviewed you in the first round – often including partners. You will be given two or three business cases and, in addition, your ‘fit’ will be tested again. Interviewers in this round will test ‘weak spots’ based on feedback from the first round (competencies that were not tested, or where performance faltered during Round 1).
Be very self-aware during your first round interviews and afterwards: Analyse points on which you feel you might have let yourself down or underrepresented your abilities; Spend time practising answers to questions on these topics; Some firms provide feedback after the first round – use this to focus further preparation (especially important with BCG)
Understanding and preparing for both case and fit components of the interview process greatly improves your chances of securing a consulting offer and also reduces the stress associated with the interviewing process. Case interviews are dealt with in detail on page 9 – 21 of this Case Book and Fit interviews are covered in detail on page 21 – 25.
The Interview Process
The Interview Process / What are they looking for?
The purpose of both fit and case interviews is to assess you on a number of selection criteria. These vary from firm to firm but can be broadly grouped into four main competencies, all of which are key to performing well in a consulting job. Successful candidates will demonstrate both: Strong ability on three of the four dimensions (i.e. ‘above the hurdle’ on at least three dimensions) ‘Outstanding’ or ‘truly distinctive’ on at least one of the four dimensions.
Outstanding or truly distinctive is judged as ‘this candidate would be within the top 25% of consultants currently working in the firm on this dimension’. If you are above the bar on all four dimensions, but not outstanding in one, you will not get the consulting job. Note: These are a measure of ‘raw talent’ rather than looking for a specific background, industry or functional experience in the consultants that they employ.
Intellectual capacity Analytics / quants. Creativity Business judgement Comfort with ambiguity
Maturity Track record (sporting, clubs) Integrity Inspirational Willing to take personal risks
Presence Confidence vs. ego People skills Team player Sense of humour
Driven by results – action oriented Enthusiasm Desire to excel Other interests
Can I send you to a client on day 1? Can I spend 12 hours on a car/plane with you?
The Interview Process / Demonstrating personal impact
Consulting is about working closely with clients, so an interviewer will be looking for you to demonstrate that you are intuitive around people – both from your track record and that you interact with him/her in an intuitive and empathetic way during the case and fit interviews. During the fit interview the interviewer will ask questions about your experience on the various dimensions they want to test, eg: Are you a team player? How have other people you have interacted with in the past viewed you? (work and MBA colleagues, team mates)
Your ‘personal impact’ is assessed during both the case and fit interviews.
Confidence, composure and grace under pressure vs. ego Are you comfortable and in control? Do you remain confident even when you make mistakes? Do you keep forging ahead?
Do you use new information or feedback on wrong answers to push forward your thinking? Do you respond to the interviewer’s feedback with – ‘That’s interesting, and it must mean that….’ rather than getting defensive? Have you demonstrated strong team working in your past jobs and extracurricular activities?
Are you enjoyable to interview? Can the interviewer see himself having a laugh with you when you’re stuck in a hotel in the middle of Scotland together?
Will you be taken seriously by the client? Are you someone that other people will listen to?
It is more intuitive in the case interview to say ‘I’m not familiar with the UK credit card industry. Do you pay off the balance in full each month like we do in Germany?’ rather than making a bald assumption such as ‘I’m going to assume that in the UK you pay the balance on your credit card each month’.
The Interview Process / Demonstrating leadership
Leadership is incredibly important to consultants. Not only do MBA level (and above) hires enter firms in positions of leadership (e.g. leading more junior analysts in day-to-day work), but all consultants are essentially expected to lead clients towards good, implementable solutions. Plus consulting firm culture tends to place ‘extra-curriculur’ leadership requirements of one sort or another on all members of the firm. Your leadership abilities are assessed during both the case and fit interviews, but primarily through exploring your track record as a leader in the fit section, as it is hard to demonstrate real leadership abilities during a case interview.
Solving the problem posed Responding to the questions actually asked (also about active listening) Not trying to bend the rules
Being articulate, persuasive and credible (leaving the interviewer feeling you could be put in front of a client on their first day in the job)
Interviewer will look for the ability to inspire others to follow the candidates and to trust their judgement
Having more than one good example of where you have occupied a leadership position and can you discuss these leadership roles convincingly and in depth?
Many recruiters – consulting companies in particular – will test for a high degree of competence in the area of solving complex, business problems. A management consultant is, above all else, a problem solver and therefore this is the core skill that consultancies look for when interviewing candidates. Consultancies use case interviews because cases give them the opportunity to see how a candidate thinks about business problems and tests a candidate’s ability to solve these business problems. The primary purpose of a case interview is, therefore, to test a candidate’s problem solving skills in the widest sense, including his/her skills in: Structured, logical thinking Issue identification Analysis Creativity Insight Business judgement Numerical ability Taking a collaborative approach.
Case interviews also give the candidate some insight into the type of work that consultancies conduct. If you do not enjoy solving problems during a case interview, it may be an indication that, in fact, a career in consulting is not for you.
An interviewer may use any or all of three types of cases during a case interview:
Business Case You are the CEO of an insurance company. You want to launch an e-commerce business that is synergistic with your current insurance products, but which is not an insurance product. How do you decide what this on-line business should sell and who it should sell to? Estimation How many gallons of white house paint are sold in the UK each year? Estimate the weight of a Boeing 747 Brainteaser What is the angle between the big and small hands on your watch if the time is a quarter past three? Why are manhole covers round?
The majority of consulting interviews are Business Cases because it is the only case type that really tests the skills that a consultancy is looking for, and also demonstrates the work that a consultant will be required to do once in the job. In a business case, the interviewer presents a business situation and asks the interviewee to ‘solve’ it through discussion.
How to Ace Case
Interviews
How to Ace Case Interviews / Tackling a Case Interview – A Step-by-Step Illustration
“How do you eat an elephant?” “One bite at a time.”
It’s the same with solving business cases. When you get a case posed in an interview, don’t just think, “Oh no, I have to solve this huge problem in one go”. Solving a case successfully consists of running through the following four basic steps:
Examples : Firm A’s profits have been declining for the past eighteen months. Why has this happened, and what would you recommend to help Firm A improve its performance?
Firm B makes jewellery and is considering expansion into the fashion retailing business. Would you recommend that it does so?
Firm C makes tin cans. It is planning to expand its manufacturing capacity and is debating whether to add to its existing plant or build a new plant. What would you recommend that it does?
An interviewer may ask an Estimation Case either in addition to or instead of a business case. Generally an estimation case would not be used instead of a business case because it does not test for the required intrinsics in as robust a way as a business case.
Example : Estimate the number of BMW cars in Germany
An interviewer may throw in a Brainteaser , but will virtually never use a brainteaser as the sole case in an interview. The problem with brainteasers is that they are binary – the candidate either ‘gets’ them or doesn’t.
Step 1 – Listen and Clarify Step 2 – Structure Step 3 – Analyse Step 4 – Conclude
Ensure complete understanding of business issue: Listen carefully Take notes if it helps you Ask clarifying questions as needed Take time to evaluate the information given
Develop approach to solve problem: Structure problem Identify key issues & prioritise Formulate an initial hypothesis/ hypotheses Articulate approach & hypothesis
Request information to test hypothesis: Ask questions and collect information Develop, test and refine hypothesis Iterate Hone in on the solution Verbalise your thought process
Synthesise findings into recommendations: Summarise your findings (not just by recapping your analysis) – draw out key facts Make a recommendation Add next steps
How to Ace Case Interviews / Tackling a Case Interview – A Step-by-Step Illustration
Step 2 – Structure
Your next step should be to ‘structure’ your answer – i.e., give yourself a coherent structure that you can use to guide your analysis. The structure that you use can be one that you have ‘made-up’, but one that is logical and fits the problem It could be a framework that you have been taught at business school, e.g., the three Cs or Porters 5 Forces. You may decide that a combination may be the most relevant.
However, it is key to remember that the objective of the exercise is not to ‘fit a framework to the problem’^1. A framework is no more than a tool that you can use to help you organise your thoughts and analysis and ensure that you are exploring all the key issues. Once you have thought of a good structure:- Communicate that clearly to the interviewer, so that he/she understands how you are structuring your thoughts Break the central issue into a number of pathways to addressing the problem, based on the structure/framework that you have developed Given that your time is limited it is important to prioritise the issues that you investigate in the case.
Example: Business case: Why Company A’s profits have been declining for the past two years Using the Profit = Revenue – Costs equation is a good structure to start with. Company A’s declining profits could be due to loss in revenues (price x volume) or increase in costs (fixed costs + variable costs).
The interviewer may have given you a hint early on which might steer you towards a particular path first. Otherwise that might become clear as you progress through the pathways you have laid out.
Example : The interviewer might say that a new, aggressive competitor entered the market eighteen months ago, which is a steer that perhaps Company A has been losing market share and hence revenue.
1 Trying to shoehorn an inappropriate framework onto a problem
Important: Most consultancies take a ‘ hypothesis driven approach’ to solving actual business problems. This means that they will come up with a ‘straw man’ as to what the likely solution to the business problem might be and use this straw man to guide, and prioritise, their analysis.
At the end of the case they may have either proved or disproved their initial hypothesis in coming up with the answer
Example: For Company A above, an initial hypothesis might be: “Given that Company A’s profits are declining and that you’ve mentioned an aggressive new entrant has come into the market, I would hypothesise that it is more likely to be a revenue rather than a cost issue, and so I’ll start my analysis by looking at revenues first”.
As you conduct your analysis throughout the case interview, remember to relate your findings back to your initial hypothesis: “This seems to support my initial hypothesis….”, “This seems to refute my initial hypothesis”, and if you are refuting your initial hypothesis indicate that “Actually, Z is more likely to be where the solution to this problem lies”.
How to Ace Case Interviews / Tackling a Case Interview – A Step-by-Step Illustration
The analysis phase should form the bulk of the case interview.
This is an iterative process.
In this phase you will:- Ask your interviewer questions Collect the information you need to conduct your analysis Develop, test and refine your hypothesis And hone in on a solution based on the facts
Important: Throughout the analysis phase you must verbalise your thought process to the interviewer so that they can see how you are thinking.
Remember the interview is a dialogue between you and the interviewer. In addition to judging your Problem Solving abilities through the business case, they will be judging you on Personal Impact, Drive and Aspiration and Leadership, so you need to work on building a rapport. Therefore during your case interview you must demonstrate that you are: Good with people (clients) Convincing in your arguments Can take feedback/challenge without becoming defensive That you are a good listener, etc.
In meetings with a client you need to have a non- confrontational, collaborative style. Use this as a model for your interactions with the interviewer
Try to ensure that the interviewer enjoys the interview. Bear in mind that they will probably be seeing twenty or thirty candidates over a two or three day period and interviews can blend into each other for the interviewer. However, if they really enjoy the interview they will remember you very positively.
There is also a skill to drawing information out of the interviewer. Many interviewers will give candidates who they believe are asking questions in a structured, thoughtful way much more information that they would give to candidates who they believe are just reeling out an unstructured laundry list of questions in the hope that they will be able to piece some kind of analysis together from that laundry list. You must only ask questions that you can justify – and then demonstrate that you are using the answer to that question to further your analysis and push the case forward.
By asking questions and bringing to light new information, you will be able to determine whether your initial hypothesis was valid or not.
If your analysis proves that your initial hypothesis was invalid: Systematically follow your structure and progress to the issue with the next highest priority Then, based on the new information you receive, develop a new hypothesis as soon as possible.
Example : “Based on what I’ve learnt from my analysis so far, it appears that actually a reduction in market share and therefore revenue is not responsible for Company A’s declining profitability. It appears to be a cost issue. Though we haven’t lost any market share due to the increased competition in the market, our COGS have increased as we’ve tried to increase the quality of our product but maintain the same price to hold on to our market share. To solve the profitability issue, Company A probably needs to look at ways of maintaining the additional quality, whilst reducing COGS, or perhaps saving on costs in other areas if this proves difficult.”
When doing calculations, explain all of the steps you are taking to the interviewer. This illustrates your thought process and maximises the ability of the interviewer to coach you.
Once again, it is key to continually verbalise your thoughts and analysis to the interviewer.
If you then get the wrong answer at the end of the calculation, the interviewer will be able to see where you went wrong and see whether it was a minor error which they can ignore, or if it was a major error which may indicate you do not have the quantitative skills to be a consultant.
Step 3 – Analyse
How to Ace Case Interviews / Tackling a Case Interview – A Step-by-Step Illustration
Clarify: For example, with the house paint case, if you do not come from the U.K you may be unfamiliar with gallons. Ask the interviewer what a gallon is (approx 4.5 lts).
How do you decide whether you should be estimating required information or requesting it from your interviewer? There is no clear answer to this, as it varies from case to case. Here is an example that expresses the alternatives well, leaving the interviewer the option of providing additional information if it is available. “I know capacity per hour, and in order to determine maximum capacity, I need to know how many hours per day the factory is working. Can you give me this information or should I make an assumption?”
Step 1 (Homes) The population of the UK is about 60 million One quarter of the population live alone – 15 million homes Three quarters live in families of between two and six – I’ll assume an average of three people per household – 15 million homes Total number of homes in the UK is 30 million
Step 2 (Houses or Flats) Some of these are houses, some are flats Every single person I know lives in a flat. However, because I live in central London, I’ll assume that is not entirely typical. I’ll assume 80% of single people live in flats, 20% in houses. 12 million flats; 3 million houses Assuming the opposite for families is probably fair 15 million houses; 15 million flats
Step 3 (Paint Colour) Because the UK is a cold country, most houses are not painted white. There are centres where white houses are popular: Devon and Cornwall, some coastal towns, ‘chocolate box’ villages. But the population in these areas is sparse and mostly houses. I will therefore assume that only 2% of flats are painted white, and 10% of houses. 300,000 flats and 1,500,000 houses
Step 4 (Area to be covered/house) My house is 1,500 square feet. I’ll assume that’s average. The height of a wall is about 10 foot, so, in the average house there is 2[(15010) + (1010)] = 3,200 sq foot of external wall per house, ignoring windows The average flat is about a third the size of the average house – 500 sq foot. (5010) + (1010) = 600 sq foot of external wall per flat (assume 50% of flats exterior walls are on building’s exterior)
Step 5 (Total Area to be covered) Total external ‘white’ wall space is (3,200*1,500,000)
Step 6 (Frequency) But an external wall will only be painted once every ten years So the total external white wall space to be painted every year is 5,000 million/10 = 500,000,000 sq foot. I’ve done a lot of painting in my life and, on the side of a gallon, it says that coverage is about 20 sq foot per gallon. But I’d give a wall two coats, therefore coverage is 10 sq foot per gallon
Answer 50 million gallons of white house paint are sold in the UK every year. Each step involves making estimations – hence the name estimation case However, the estimations are (hopefully) sensible, relevant and are based on sound reasons It is legitimate to use any information that the interviewer might have given you and to estimate other facts you need based on your own best judgment While you do have some liberty to make guesstimates, your guesstimate is an indication of your common sense You will not be expected to know exactly how many people live in the UK, but you should have a ball park figure for key, likely statistics Guesstimating the population of the U.K. at 1 billion people is likely to make a very poor impression. If you have no idea about the magnitude of what you are guessing at, state that and see if the interviewer offers up some information State all your assumptions out loud Lead the interviewer through your solution
That said, do not panic, and do not spend an undue amount of time trying to get the answer to be perfect – a good approximation is fine.
If you are planning to interview in the U.K.: Have a general idea of the population of the UK (also for France, Germany, the US, etc.) Knowing volume formula of a sphere (like a tennis ball) is also useful, e.g. for something like ‘How many tennis balls would fit in Buckingham Palace^3 ?’ It is 4/3 * pie * r 3 ( Similarly, you should know the formulas for the radius and diameter of a circle, information for a rectangular cube such as for a building, etc.)
3 it is probably sufficient to show that you are using the relative volumes to determine how many balls would fit in the building
How to Ace Case Interviews / Six Major Types of Business Case
Brainteasers are not cases in which a technique can be learnt, mainly because a brainteaser can be about virtually anything and posed in any way. However, brainteasers are increasingly rarely used as interviewers seem to be realising that they do not give a good insight into a candidate’s ability to ‘do the job’.
If you get a brainteaser, just try to stay calm and take some time to think about the problem. Also, and very importantly, don’t panic if you don’t manage to solve the brainteaser. They are binary – you either get the answer or not – and, if you don’t, it certainly does not mean that you won’t get the job. It will just be one of many data points that the interviewer will use to make a decision.
Other points to remember
In addition to solving the case in a sensible way, the interviewer will be looking for you to generate some rapport with them
Saying things like – “Every single person I know lives in a flat. However, because I live in central London, I’ll assume that is not entirely typical” – is chatty and gives a little of yourself away. It also serves to illustrate to the interviewer that you are not just pulling your numbers out of the air
Level of detail to use in your answer This depends on whether the estimation case is given to you as the only case in the interview or as an add-on to a business case. You should adjust the response accordingly
Key statistics and formulae It will be useful to know some common numbers and formulae to get you through these types of questions
In general, there are six main types of business case:
However, it must be remembered that these six categories are not mutually exclusive or completely exhaustive. For example, a market entry case might require industry analysis, and an acquisition case may involve evaluating return on investment. Some cases may not fit neatly into any of the six major business case types, but may incorporate certain elements from one or more of them.
Profit improvement cases are probably the most common business cases that you will encounter in an interview. They are also arguably one of the easiest as the problem is easily structured through systematically examining each aspect of the profitability relationship: Profit = Revenue – Costs. In this business case the interviewer will typically ask you analyse why a firm’s profits have decreased and what a firm could do to reverse this decline and bring itself back to profitability.
You should ensure that you are familiar enough with each of these formulae to be able to use them in a case interview situation. A good way to tackle this kind of case is to use the profitability formula to structure your answer up front – laying this structure out for the interviewer - and then exploring each dimension in detail. In addition to the formula, you should have a sound understanding of both revenue and cost related issues.
Example: “Company A’s profits have declined by 30% over the last eighteen months. The CEO would like you to help him/her understand why this profitability decline has happened and what he/she can do to return Company A to profitability.”
As mentioned above, Profits = Revenues - Costs = [(Price - Variable costs) x Quantity]
- Fixed costs
Using the expanded form of the equation (in italics) adds an additional degree of depth to your analysis and ensures that you don’t neglect the difference between fixed and variable costs during your analysis.
Other valuable profitability formulas that you could incorporate in your analysis include: Revenues = (Price * Quantity) Costs = Fixed costs + Variable costs Break even quantity = FC/ (Price - Variable cost)
How to Ace Case Interviews / Six Major Types of Business Case
Barriers to Entry/Exit: How significant are barriers to entry and exit, e.g. economies of scale, learning curve, high fixed costs, and access to distribution channels? How frequent is entry/exit? What is the likely competitive response? How steep is the learning curve? How important is brand equity? Is the industry regulated? What current and potential substitutes exist for the industry’s product/service? Overall: What factors drive success in the industry, e.g. technological leadership, consumer insight, brand equity? That is, what are the benefit and cost drivers? Are there any trends that affect the benefit or cost drivers?
Don’t forget to summarise, with an overall conclusion, as to whether this is an attractive market to participate in, in terms of likely profitability and growth, and how your earlier analysis supports or explains that view.
In a market entry case, the interviewer will ask you to decide whether a company should expand into a new geographic region, a new/related business, or a new customer segment.
Example, ‘Company C manufactures and sells costume jewellery in the USA. They are considering expanding their operations to include fashion clothing, still within the USA. Would you recommend that they do so?’
The three C’s (customers, competitors and capabilities) is a valid framework to use to solve this case.
As with the industry attractiveness example, you should not just blurt out to the interviewer that you are going to use the 3Cs framework. Think what you can add to the three Cs to enhance its value.
Another approach that can be useful is to contrast the company’s current business model, with an outline of the proposed business model for the new business. A comparison between the two is a good starting point to identify potential synergies and risks of the proposed expansion.
A general approach to market entry cases is to: Size the market: Define the market: product, geography, etc. Evaluate industry structure Assess market size, profitability, and growth by asking how much capacity is in the market Identify relevant trends (regulatory, technological, demographic, etc.) Identify key success factors Evaluate risks
Understand the competition: Key players Competitive situation (concentration and intensity) Share and positioning Core competencies (strengths and weaknesses) and resources Likely reaction to entry Differentiation Cost structure
Analyse customer needs: Segmentation (size, profitability, share, growth) Drivers of purchase behaviour (product, price, promotion and place) Power in the market
Identify Gaps in Customer Needs
Match between the company’s strengths and those needed for the new market: Core competencies
Evaluate Barriers to Entry Customer-related:
Evaluate Methods of Entry Build, acquire, partner? Quantify investment cost and risk
Analyse how firm has entered markets in the past, whether it has it been successful or unsuccessful, and why?
How to Ace Case Interviews / Six Major Types of Business Case
Bear in mind this is a very long list, and will not all apply in each case. It is vital, having used this approach to structure your thought processes and initial discussion on the topic, to identify a prioritised list of those areas that seem to be the biggest potential issues/factors in the decision making. Highlight this prioritised list during a summary of the preceding discussion, in order to build up to a go/no go recommendation. It is perfectly acceptable to say that you need further information in certain areas, but that your initial hypothesis is: “We should (or should not) explore this business opportunity further”.
Capacity expansion cases usually revolve around how a firm can optimally increase its output potential.
Example: “Your client, the CEO of Company D has decided that he/she needs to expand Company D’s manufacturing capacity and is considering either building a new plant in Kuala Lumpur, Malaysia, or increasing the scale of its current plant in Singapore. Which would you recommend that it do?”
A good approach to tackling capacity expansion cases is:
As in the earlier cases you need to summarise your analysis, in order to support a go/no go recommendation. It is perfectly acceptable to say that you need further information in certain areas, but that your initial hypothesis is: “We should (or should not) explore this business opportunity further”.
In acquisition cases, an interviewer will typically ask you to evaluate whether a company should purchase another firm.
Example: “Company E, a manufacturer of engines for sports cars, is considering an acquisition of Company F, which makes sports cars. Would you recommend that it do so?”
Potential Synergies: When approaching acquisition cases, the easiest thing to remember is will 1+1=3?, i.e. will the acquisition add value over and above the value of the two component companies?
Understand the acquiring company’s line of business: Core competencies Cost structure Structure of the industry in which it currently competes
Assess the rationale for acquisition, e.g. Why is the company considering the acquisition? What potential synergies exist? Acquire resources: increase capacity, increase distribution, broaden product line, improve technology, human capital, brand name, customers (network effect) Decrease Costs: economies of scale, economies of scope (brand, distribution, advertising, sales force, management talent, etc.), climb the learning curve more quickly Other strategic rationales
Assess the likely response of competitors if the acquisition occurs
Consider organisational issues Will potential synergies be realized? Might the firm make any changes in advance of the acquisition to be better positioned post-acquisition? Is the firm in a position to perform the integration?
Determine whether the potential revenue increase/cost decrease exceeds the price of acquisition (NPV analysis)
Consider alternatives to the acquisition; other targets; organic growth
If the acquisition is vertical as opposed to lateral (new business) or horizontal (increasing the firms current scale) consider the following: What are the benefits of using the market that is keeping the entities separate? What are the co-ordination costs associated with using the market?
