INTRODUCTION
“Case interview frameworks” is one of the most searched for group of terms related to consulting.
At the big three consulting firms (McKinsey, BCG, and Bain) a typical interview consists of a 30–60-minute session divided between a typical interview (filled with personal experience questions) and a case interview. There are typically two rounds of interviews with three interviewers.
The case interview section then begins with the interviewer giving you a hypothetical case. Wait for him or her to finish. This is a test! When they are finished explaining, they ask you if you have any questions. Asking for clarification is actually a positive point in your evaluation. The interviewer then asks the first question related to the case. The format in which you provide your answer counts just as much as whether the answer makes sense.
The second and third questions regarding the case typically ask you to elaborate some aspect of your answer.
Finally, most case interviewers like to ask you to summarize the case for them as if you were summarizing for the CEO of the client company.
The frameworks are a tool, the goal is to organize your thoughts and deliver a coherent answer.
THE 5 STEPS OF CASE INTERVIEWING
Identify the Problem: Often interviewees answer the wrong problem. After the first prompt, make sure you can identify the problem.
Analyze the problem: You can use a learned framework or parts of it to organize the problem. If the problem is increasing costs, then you can either use the profitability framework or the internal/external framework.
Formulate options: After you have analyzed the problem, the interviewer will ask you for possible solutions. Think through the cause of the problem, summarize the cause or causes and then come up with 2 – 3 options.
Make a Decision: The interviewer would then ask you to decide on which is the best solution and why you think so.
Summarize the case and make a recommendation: As you write notes following the prompt and after each question, be sure to draw boxes or somehow mark your final answers for each question.
FRAMEWORKS
THE 3 C’S
The 3 C’s is the most widely known framework used in consulting, but it is also the broadest.
The 3 C’s simply stand for Company, Customer, Competition. You may read elsewhere that there is a P included which stands for Product, in our understand that falls in with ‘Company’.
SWOT ANALYSIS
The SWOT analysis or matrix is used for decision making to invest in a company, product, service, or industry.
How well the internal factors meet the external factors is termed the strategic fit.
PESTEL
PESTEL is a macro environment framework used in strategic management to analyze external factors of a market, firm, product, or service.
PORTER’S FIVE FORCES
Another useful and well – known framework is Porter’s five forces.
It is a framework used to assess the competitive landscape in the micro environment or the environment that directly affects the company.
As a side note, in the 1990s a sixth force was included but has not been as widely adopted. The sixth force is the effect or impact of complementary goods on an industry’s profitability depending.
PROFITABILITY FRAMEWORK
Below are some basic formulas you should know in order to maximize your use of the profitability framework: Profit = Revenue – Cost Revenue = Price * Volume Cost = Variable Cost + Fixed Cost
4 Ps OF MARKETING
4 Ps OF MARKETING This framework is a very simple one to remember as the 4 factors that go into a marketing campaign.
THE MCKINSEY M&A FRAMEWORK
The most common M&A framework uses THREE criteria to investigate and guide you to a decision:
- First Bucket (Stand-Alone Value): Ask about the economics of the company.
- Second Bucket (Synergy): Is the company a good fit? Collectively, is the whole more than the sum of each individual company?
- Third Bucket (Feasibility): Is this merger or acquisition even possible?
COMPANY DECISION MAKING
There are several good frameworks to think of for this problem and they are the VRIO framework, the BCG growth matrix, and the McKinsey/GE matrix.
VRIO FRAMEWORK
The VRIO framework which stands for Value, Rare, Imitable, and Organization is a simple framework originally developed by J.B. Barney in 1991 to evaluate whether a firm or product has competitive advantage.
BCG GROWTH MATRIX
Also known as the product portfolio matrix, it is a 2×2 matrix first developed by the founder of BCG, Bruce D. Henderson to help a company decide where to allocate its resources.
MCKINSEY AND GE MULTI-FACTORAL MATRIX
Similar to the BCG matrix but much more involved, the GE matrix is a 3×3 matrix with Market Attractiveness on the Y-axis, Business Strength on the X-axis, and every product or business unit identified with a high, medium, or low score for both the X and Y axis.
ANSOFF MATRIX
The Ansoff matrix developed by Igor Ansoff in 1957 describes the product-market mix in a 2×2 matrix of Products and Markets.
MCKINSEY 7S FRAMEWORK
The 7S framework is used to evaluate an organization’s effectiveness or productivity.
- Style: an organization’s culture.
- Skills: Does the company have the necessary skills to be competitive?
- Systems: Processes of a company.
- Structure: Classical hierarchy.
- Staff: The intrinsic talent of the organization.
- Strategy: What is the company doing to gain competitive advantage?
- Shared Values: What is the mission/vision of the organization?
SUPPLY CHAIN & DISTRIBUTION CHANNELS
A case focused on the supply chain & distribution channel is not as common but there are a few frameworks:
CAPACITY FRAMEWORK
If it just wants to know if it is a good idea to expand existing production, then we need to identify demand side economics, supply side economics, and consider the cost of expansion.
SCOR MODEL
Supply Chain Operations Reference (SCOR) model was developed in 1996 by a management consulting firm now acquired by PricewaterhouseCoopers LLP (PwC).
It breaks up the supply chain into five general processes:
- Plan
- Source
- Make
- Deliver
- Return
PORTER’S VALUE CHAIN
The value chain framework by porter is divided into primary (directly factor into final product) and support activities (to support the primary functions).
Primary Activities:
- Inbound logistics.
- Operations.
- Outbound logistics.
- Marketing and Sales.
- Service.
Support Activities:
- Procurement.
- Human Resource Management.
- Technological Development.
- Infrastructure.
FINANCIAL TOOLS
- Break-Even Analysis: This analysis tells us how many units we need to sell or at what price in order to recoup the fixed cost invested in a new product or service. Break-Even Price = (Total Fixed Cost/Break-Even # of units) + Variable Cost per unit.
- Profitability Ratios.
- Compound Annual Growth Rate (CAGR).
- Elasticity. The Price Elasticity of Demand is the percentage change in QUANTITY divided by percentage change in PRICE.
INTERVIEW TIPS
10 Tips for Effective Case Interviewing:
- Always write things down!
- Always read all the information.
- Structure the problem.
- Develop hypotheses, ask for relevant facts, defend/refine hypotheses.
- Synthesize your thoughts and draw conclusions from your analysis.
- Be pragmatic.
- Think before speaking.
- Don’t panic if the answer is not apparent.
- Your problem solving and analytical approach is more important than the solution.
- Engage with your interviewer and be yourself.
