Introduction to case cracking

analysis & consulting

recruitment process
Philippe de La Chevasnerie
HEC MSc Strategic Management
October 2013
philippe.libault-de-la-chevasnerie@polytechnique.org
1 Introduction to case cracking analysis HEC October 2013 Philippe de La Chevasnerie -
Introduction to case cracking & consulting recruitment
process by an alumnus
Teaching as a MSc Strategic Management
alumnus
Not speaking for the firm in any ways
This is not a McKinsey lecture
Not exhaustive, based on a personal experience
No claim to be the best expert
Many people, many (contradictory) opinions
Bias given academic, professional, and personal
history
A 1-year old opinion of a changing industry
Goals
Providing an overview of
recruitment process
Detailing necessary steps
to complete before and
during application
Giving training methods
and interview tips based
on my experience
Introduce you to case
cracking analysis
Pre-interview preparation
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Networking 1
CV 2
Cover letter 3
Useful reading and materials 4
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Networking: most important step before applying
to consulting
Why?
What?
How?
Results
1
Most efficient way to skip CV scanning
Compulsory step to any application
(cover letter)
Give you access to in-depth consultants
experience and insights
Send emails with multiple questions
Receiver usually suggest that you
call him
Discuss with consultants & get
their card
1 to 1 relationship:
Friends / acquaintances
Alumni: Ms Strategic Management/
former school
Forums / firm events / challenges
Lectures
Learn firm specificity (practice,
life-style, etc)
Put your contact name on the
cover letter
If possible have your CV dropped
Learn about recruitment process
Have a test interview !
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Establish personal relationships with members of the firm 1
LinkedIn?
First contact
Email
Customize
Leveraging common points (alumni, common friend, common
association, former company, etc)
Short, humble & polite
Basically asking many relevant questions on the firm
Talk/meeting
Phone call, forums & firm events
Be on time
Be prepared (ask relevant questions again)
Let the consultant talk about him: it is not about you
Try to be pleasant & be smart!
Achievements
Cover letter materials (firm specificities & consultant name)
CV dropping
Learn about interview process
Test interview
Next steps
Send a thank you message
Keep your contact informed of your process progression
Maybe request another phone call
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Consulting oriented CV 2
CV tailored to consulting
Display your goal: full-
time/internship at a consulting firm
Quote strategy & related academic
lectures
Select consulting or similar
experiences
Consulting
Investment banking
Strategy challenges
Fact based & numerical
Perfect language & layout
Will be very useful for you during
interviews
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Cover letter: a necessary step to get interviewed
(and then useless)
3
Goal
CV vs. Cover letter
Format
Story telling
Create a successful package to
succeed application scanning
Usually more than 25 applications
per position: better be above the
average
All the more important than your
resume is not mind-blowing
Need to be customized:
30% re-writing for each application
Not a narrative CV
1 page, no more
Perfect language & layout
Professional
Easy to read, consistent and not
so boring
English / French
Your application must seem to be the
natural consequence of your life
Opportunity to bring non CV
experiences
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Cover letter: bragging 101 3
Why are you interested by
the company ?
Why are you interested by
the job?
You
Why are you a good fit for
the position ?
Academic
Professional
Extra - professional
Me
Next steps ? Call, interview
Us
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Cover letter: You (why do you want to do this job?) 3
Why consulting?
Multiple sectors (sales,
marketing, production,
strategy, etc)
Multiple domains (industry,
services, finance)
Multiple companies
International
High level issues
High impact
Change implementation
Interactions with important
clients
Steep learning curve
Intellectually challenging
Nice colleagues
Etc
Don't mention the money
I am attracted to consulting
since it would allow me to work
on diversified strategic corporate
issues across multiple
companies and many industries.
It would give me the opportunity
to study deeply each side of
these problems and have a true
impact on their resolution.
I would thus evolve among
smart consultants teams,
hopefully quickly assume
responsibilities and be in contact
with top management clients. I
am also very concerned by the
steep learning curve of the job.
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Cover letter: You (why do you want to go to this firm?) 3
Why the firm ?
Specificity vs. competition:
Practices / Growth
International scope / Size
Life-balance / Working
methods
Famous for ?
Others
Quote the people you know
& be sure they know you
Quote the firm events
you attended
Show your knowledge of the firm,
that you have done your
homework
Consistency: link what you are
seeking in the firm / job to your
experiences / strengths
I would like to express my deep interest in
McKinsey and inquire about your junior
position at the Paris office at the end of my
ultimate year of graduate studies in Ecole
Polytechnique and HEC (June 2013). I am
specifically attracted to McKinsey by its
outstanding worldwide reputation,
leadership and top clients portfolio.
I am also very enticed by your
entrepreneurial spirit (as I heard of the
building your own McKinsey state of
mind). I have talked with employees of the
firm Mrs. XXXX, Mr. XXXX, Mr. XXXX and
XXXX especially, as they are alumni of my
school. Their description of your firm
culture, its coaching environment, very
teamwork-oriented, gathering people
constantly looking for improvement and its
truly international scope raised my
enthusiasm.
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Cover letter: Me (why are you such a good fit for the firm?) 3
My training at Ecole Polytechnique with a
concentration on finance and economics
has provided me with a strong analytical
and quantitative background. The Strategic
Management master I attended in HEC this
year confirmed my taste for consulting
through strategy courses and weekly
workshops with consultants.
As I wanted to get a strong financial
training before applying to consulting, I
made an internship at the Goldman Sachs
(Paris, 2012) in the M&A department. As I
took part especially into a buy-side
advising and bonds emission I became
familiar with valuation methods and
financial modeling. This experience taught
me some of the basics of consultingetc
Basically bragging 101
Consulting firms are looking
for:
High academic
achievements
Strong analytical &
quantitative profiles
International experiences
Leadership
Could need some
customization:
Depends on some firms
requirements (especially
small and specialized
firms)
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Reading and materials 5
Books
Interview
collections
Ace your case
Websites
Caseinterview.com
Useful tips and videos of interviews
Vault.com
More or less useful information about consulting firms
Consultor.fr
News about the French consulting sector
Press?
Consulting firm recruitment
process
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Timing
Full-time vs. Internship?
Decision process
Insights
Process
1
2
3
4
5
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Recruitment process 1
Internships: beware
of deadlines
For a few firms
only
Either physical
or on the phone
Could be at the
end
Maths/logical
tests
Several rounds
of interviews
with consultant
Application (HR interview) Interview rounds Job offer
Free lunch
Negotiation (~)
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When to apply ?
Quotas
Officially consulting firms hire as soon as
you proved to be part of their target level
But they still have maximum quotas
Do not
wait for
Workshops with consultants
Strategic lectures
Company project
Timing
HR services not so quick to react
Recruitment processes: up to 4 rounds:
very long & time consuming
Need to go through some non-target
consulting firm processes before
interviewing with your targeted companies
1
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Applications
2013 2014
Oct Nov Dec Jan Feb Mar Apr May Activities
Target-firms interviews
Networking
Non-target firms interviews
Case cracking training
Application
Cover letter
CV
1
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Applying for a full-time or an internship?
Your previous experience: significant
consulting experience is enough
Academic, professional and extra
professional leverageable
achievements
Are you risk adverse?
Are you sure you want to
do consulting?
Are you in such a hurry?
Exactly the same job but higher
wage for a full-time
Internship is not always considered
as firm experience regarding
promotions
Slightly higher expectations from
the firm for a full time
Getting a full time is tougher than
getting an internship
When can you apply for a full-time? Pro & cons
2
If you are going in for a full-time: hedge your risk (with firms not hiring full-
time for e.g.)
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Next round decision process 3
Next round decision process:
Each interviewer will issue an opinion:
Yes: he would like to work with you
Maybe: the interviewer has some concerns about
you, that will be tested during next rounds
No: one no will end your process
Final decision is taken on the basis of all the
interviews
Once eliminated from a firm process, you cannot
apply before 2 years usually (or more)
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Applications: a few insights 4
French consulting firms hiring policy regarding non-
native French speakers:
Interaction with clients: need to speak perfect French
Better to apply in your home country
Students coming from non-target schools:
HEC Ms Strategic Management label maybe not enough
to go through CV scanning automatically
Nonetheless not an obstacle if you get recommended
Tips to get a quicker answer from HR and/or accelerate
process:
Tell them you are well under way at others firms (or at
least pretend to be)
On the other hand, do not hesitate to postpone if you
are not ready!
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Firm specificities 5
3 rounds (including one
collective case cracking
analysis for internship) with
up to 2 interviews per round
No HR interview
Partner at the last round
3 rounds, with up to
2 interviews per round
HR interview
Only market sizing cases,
pretty straightforward, but
done alone (the consultant
will leave you 10 minutes
and then ask you to present
your findings)
3 rounds with up to 2
interviews per round
HR interview
2 rounds (internship, full-
time?), with 2 interviews per
round
English test (first English
case on the phone with
Wall Street English Institute
and then summary
exercise), first round
No HR interview
3 rounds (2 for internship),
with 2 interviews per
round
Numerical & reasoning
test: medium, 1st round
No HR interview
2nd round: written case
2 rounds, with 2
interviews per round
No HR interview (?)
3 rounds with 2 interviews
per round
No HR interview, but last
interview with Paris head
office (without case)
3 to 4 rounds (2 for
internship), with up to 3
interviews per round
Numerical & reasoning
test: challenging, 1
st
round
End HR interview for
internship
1
st
round with a partner
Consulting interviews:
numerical tests and
motivation step
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Numerical and reasoning tests
Motivation and personality
1
2
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Consulting interviews: numerical & reasoning tests 1
Firms conducting numerical and reasoning tests:
McKinsey Another firm Another firm
Format: 1 hour, 26
questions,
on paper, without
calculator
Several business
separated cases
Difficulty: challenging
Many calculations
Tricky reasoning
questions
Format: 45 minutes, 23
to 26 questions, on a
computer, with calculator
1 business case all along
Difficulty: medium
Enough time to finish
No traps
Format: 20 minutes, 30
questions, on paper,
without calculator
Non-related questions
Difficulty: medium
Too many questions,
no time to finish
But very low threshold
score
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Consulting interviews: numerical & reasoning tests 1
How to train?
Practice McKinsey PST test: 4 tests available on their website with detailed corrections
Practice GMAT test
Needless to say:
Be sure you know your multiplication tables
Be sure you know how to do divisions
Be sure you are perfectly comfortable with basic arithmetic (inequalities, quadratic expressions and Taylor formulas)
Do the right approximations
10 to 20 minutes before a test / interview
Remember all these tips
Do some basic calculations as a warm-up
Constantly manage your time
Quadratic expressions Taylor formulas (for x~o)
o + b
2
= o
2
+ 2ob +b
2
1 + x

= 1 + x +
-1
2
x
2
+ o (x
2
)
o - b
2
= o
2
- 2ob +b
2
1
1 + x
= 1 - x + x
2
+ o (x
2
)
o
2
- b
2
= o + b o - b
1
1 - x
= 1 + x + x
2
+ o (x
2
)
Basic divisions
1/1 1,00
1/2 0,50
1/3 0,33
1/4 0,25
1/5 0,20
1/6 0,17
1/7 0,14
1/8 0,12
1/9 0,11
1/10 0,10
1u
u
1u
b
= 1u
u+b
;
1u
c
1u
d
= 1u
c-d
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Consulting interviews
Consulting interview takes place in two
steps:
Motivation and personality
Case cracking
Language: either completely in French,
English or both
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Goal
Consulting interviews: motivation and personality (1/2) 2
The goal of the motivation step is to assess the match between
your profile, motivation and the firm values:
Why do you want to do consulting?
Why in this firm in particular?
Why would you be a good fit for the firm?
And to assess the following:
Are you ready to handle senior client interaction?
Are you a good team-worker?
Is it pleasant to work with you?
Are you a leader?
Do you take initiatives?
Do you have good communication skills?
Can you show creativity?
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Consulting interviews: motivation and personality (2/2) 2
Goal
Interview step progress will depend of the interviewer:
Some will just ask "Tell me more about you and why you are there?"
Some will be very specific and ask very accurate questions
Before D-day develop some story telling (cf. cover letter) about you to
be able to answer broad questions
Concise
Organized (chronological?):
Professional
Academic
Extra-professional
Not a narrative story
What are the key takeaways of these experiences
How are they relevant from a consulting point of view?
Miscellaneous questions:
3 qualities / 3 faults
Last movie seen / book read
Where else are you applying to?
Where do you see yourself in 5 years?
Give an example where you over achieved under pressure /
convinced a hostile group of people to your / took the lead
Consulting interviews:
case cracking
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What is a case?
Method
Framework
Useful tools
Progress and end of the case
1
2
3
4
5
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What is a case 1
A case: a business question
On a topic you have no knowledge about
To be answered through a dialogue with
the interviewer
Definition
Assessing
The way you structure your thoughts
Your reasoning
Your listening skills
How you handle pressure
Goal
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Method: first approach 2
Case question 1
Summarize the question 2
Verify the objectives (and look for hidden ones) 3
(Quick questions) 4
Setup a framework 5
Solve the case 6
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2
Case question
Initial data
Question(s)
Case objective(s)
Data
1
2
3
4
5
Revenues
Costs
Price
Volume
Variable
Fixed
A
B
C
D
E
F
G
H
I
J
Number your sheets
Do your calculations on a separated sheet and number them
Highlight the key data and metrics
Method: structure your case, structure your thoughts,
structure your workspace
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Frameworks 3
Developing a new product
Entering a new market
M&A
Profitability
Useful tools
1
2
3
4
5
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3 Frameworks
What is a framework? Basically an issue tree:
A tool to structure your reasoning
A tool to take the lead during the case
MECE: Mutually Exclusive and Collectively Exhaustive
One of the most challenging part of the case:
45 seconds to come up with a relevant way to tackle a problem
you have never been aware before
Will influence the rest of the case: some frameworks can solve a
case very quickly
Classic frameworks: very useful (you must know them) but:
Must be adapted to each case
Will not always be relevant: in this case build your own
framework
36 Introduction to case cracking analysis HEC October 2013 Philippe de La Chevasnerie -
1 Frameworks: developing a new product1
1 Freely inspired from Cosentino's
Product
Advantage/disadvantages
Proprietary/patented Product
Substitutes/differentiation from competition
Whats special or proprietary about our product?
Is the product patented?
Are there similar products out there? Are there
substitutions?
What are the advantages and disadvantages
of this new product?
How does the new product fit in with the rest of our
product line?
Customers
Who? Segmentation
How to reach them/retain them
Price willing to pay
Custo-
mers
Who are our customers?
How can we best reach them?
Can we reach them through the Internet?
How can we ensure that we retain them?
Market
strategy
Cannibalization / image problem
Effect on sales
Competition response/competition
situation: market shares
Market
strategy
Are we cannibalizing one of our existing products?
Are we replacing an existing product?
How will this expand our customer base and
increase our sales?
What will the competitive response be?
If its a new market, what are the barriers to entering
this market?
Who are the major players and how much market
share does each firm have?
Financing
Profitability? Break even (in % of total
mkt.?)
How to finance it ?
Finan-
cing
How is the project being funded?
What is the best allocation of funds?
Can we support the debt? (What if interest rates
change? What if the economy sours?)
1
2
3
4
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Frameworks: entering a new market
1
2
1 Freely inspired from Cosentino's
Why? Goals? Objectives?
Profitability
Entering
Yes
No
M&A
Joint venture
Joint venture
Analysis
How to
enter the
market?
Start from scratch
Acquire an existing player within the desired industry.
Form a joint venture/strategic alliance with another player with
similar interests
Major players, market share,
dynamics, strengths and
weaknesses
Product differentiation
Barriers to entry
Competition
Competition
Enter the
market?
Who is our competition & what are its market shares?
How do their products and services differ from ours?
How will we price our products or services?
Are there substitutions available?
Are there any barriers to entry? Are there any barriers to
exit? How do we exit if his market sours?
What are the risks? For example, market regulation or
technology
Size
New
market
Growth rate
Customer segmentation
New
market
What is the size of the market?
What is the growth rate?
Where is the company in its life cycle? (Emerging? Mature?
Declining?)
Who are the customers and how are they segmented?
What role does technology play in industry? How will the
competition respond?
1
2
3
4
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3 Frameworks: M&A
1
1 Freely inspired from Cosentino's
Objectives
why buy
Market access
Diversity holdings
Taxes
Pre-empt competition
Synergies
Shareholder value
Boost brand
Increase
market share
Cost savings
Cultural
integration
Distribution
channel
expansion
Reduction of
fixed
and variable
costs
1
Fair price? Is it profitable?
Can we afford it? How to pay for it
What if the economy sours?
Reintegration costs
Acquisition
costs
2
What shape is the economy in?
A market leader?
Industry overall technology risks
How secure are markets, their customers and suppliers
Margins
Competitive response
Due
diligence/
Risks
3
Exit
strategy
Hold for how long?
Break it up and sell off its parts
4
Why
merging?
Increase market access
Diversify their holdings
Pre-empt the competition
Gain tax advantages
Incorporate synergies: marketing, financial,
operations.
Create shareholder value
Due
diligence
What kind of shape is the company in?
How secure are its markets, customers and
suppliers?
How is the industry doing overall? And how
is this company doing compared to the
industry? re they a leader in the field?
What are the margins like? Are they high-
volume, low-margin, or low-volume, high-
margin?
How will our competitors respond to this
acquisition?
Are there any legal reasons why we cannot,
or should not, acquire it? off parts of it?
Price
Is the price fair?
How are they going to pay for it?
Can they afford it?
It the economy sours, can they still make
their debt payments?
Exit
How long are they planning to keep it?
Did they buy it to break it up and sell off
parts of it?
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3 Frameworks: Profitability 4
Profits
Revenues
Costs
Revenues / unit
Number of units sold
Cost
/unit
Number
of units
sold
Fixed cost
Variable
cost
E (P=R-C)
Top down approach: determine if the issue comes from:
The Environment (10%): E
The firm itslef (90%): P = R - C
Segment the numbers
Compare to historical metrics to find the issue
Compare to competition
Tips:
1)
2)
3)
Segmentation
Revenues possible segmentations:
Product / product line
Distribution channel
Geography
Customer type (new/old, big/small)
Etc
Costs possible segmentations:
Logical components
Value chain
Etc
Use the force:
Key success factor: business sense
Know when to follow the framework (methodical approach), and
when to trust your intuition
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4 Useful tools
Forget 4Cs, 7S, SWOT
Porters Five Forces The value chain
Five Cs Four Ps
Operations
Raw
materials
Delivery
Marketing
& sales
Service
5
Suppliers Buyers
Substitutes
Potential entrants
Industry competitors
Rivalry Among
Existing Firms
Threat of new
entrants
Bargaining
power of
buyers
Threat of
substitute
products or
services
Bargaining
power of
suppliers
Legal
Dynamic
overview
Company: What do you know about the company? How big is it? Is it a
public or private company? What kinds of products or services does it offer to
its clients?
Costs: What are the major costs? How have its costs changed in the past
year? How do its costs compare to those of others in the industry? How can
we reduce costs?
Competition: Who are the biggest competitors? What market share does
each player hold? Has market share changed in the last year? How do our
services or products differ from the competition? Do we hold any strategic
advantage over our competitors?
Consumers/clients: Who are they? What do they want? Are we fulfilling
their needs? How can we get more? Are we keeping the
ones we have?
Channels: Distribution channels. How do we get our product into the hands
of the end users? How can we increase our distribution channels? Are there
areas of our market that we are not reaching? How do we reach them?
Product: What are the products and services? What is the companys riche?
Price: How does our price compare to the competitions? How was our price
determined? Are we priced right? If we change our price. what will that do to
our sales volume?
Place: How do we get oil products to the end user? How can we increase oil
distribution channels? Do our competitors have products in places that we
dont? Do they serve markets that we cant reach? If so, why? And how can
we reach them?
Promotions: How can we best market our products? Are we reaching the
right market? What kind of marketing campaigns has the company conducted
in the past? Were they effective? Can we afford to increase our marketing
campaign?
Raw materials and inbound logistics: receiving materials into the
warehouse, relationships with suppliers, delivery, etc.
Operations: processing raw materials into product through the use of capital
equipment and labor
Delivery: warehousing and distribution channels
Marketing and Sales: marketing strategy, identification of customer base
and the cost of customer acquisition, sales force issues (e.g.. commission,
company car, etc.)
Service: customers support, customer retention (ls cheaper to retain a
customer than to go out and bring in a new one.)
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4 Useful tools: Porters five forces (Cheng
1
's version)
1 www.caseinterview.com
Who is the customer?
Identify segments (segment size, growth rate, % of total market)
Compare current year metrics to historical metrics (look for trends)
What does each customer segment want? identify keys needs
What price is each segment willing to pay? determine price points and price elasticity/sensitivity
Distribution channel preference for each segment
Customer concentration and power (does one customer control all the demand, the Wal-Mart effect)
Customer
Nature of product (benefits, why someone would buy it?)
Commodity good or easily differentiable goods (could company increase differentiation?)
Identify complimentary goods (can we piggy bank off growth in compliments or near compliments?)
Identify substitutes (are we vulnerable to indirect competitors namely substitutes?)
Determine products lifecycle (new vs. almost obsolete)
Packaging (optional) whats bundled, included (ex. Razor vs. razor blades, with w/o service contract
Product
Capabilities and expertise
Distribution channels used
Cost structure (mainly fixed vs. variable High fixed cost = barrier to entry compare to industry, often insightful)
Investment cost (optional: only if case involves an investment decision)
Intangibles (e.g., brands, brand loyalty)
Financial situation
Company
Competitor concentration and structure (monopoly, oligopoly, competitive, market share concentration)
Competitors behaviors (target customer segments, products, pricing strategy, distribution strategy, brand loyalty)
Best practices (are they doing things we are not?)
Barriers to entry
Supplier concentration
Industry regulatory environment
Life-cycle of industry
Competition
5
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4 Useful tools: pricing strategies 5
Customer driven
What is the value of your product / service from a
customer point of view?
How to share this value between company and
customers?
Cost driven
What are your costs?
What kind of margin do you want to achieve?
Competition
driven
What are the competitive prices?
Is your product different from the competition? Better or
worse?
Are customers price sensitive (elasticity)?
Key points
Most relevant approach per decreasing order:
customer/competition/cost driven
Elasticity depends from customers (e.g. very low
elasticity in luxury, high for consumer goods)
Ambiguous effect of price increase on revenues:
Decrease sales (usually)
-Increase revenues per unit
43 Introduction to case cracking analysis HEC October 2013 Philippe de La Chevasnerie -
3 Progress and end of the case
Watch the clock:
Since you have to lead, you are the one in charge of timing
Do not stay stuck on a very specific issue of the framework
Step back each time you reach a milestone:
Quickly sum up your findings before going on (partial conclusion)
Try to find if you exhaustively treated the issue
Find the right balance between:
Taking a lot of initiatives (setting all the hypothesis, choosing the case
structure completely on your own)
Asking directions (which branch of the issue tree should I dig into first,
confirmation of your findingsetc)
This balance depends of the case and the interviewer:
Listen very carefully to what he/she says
Decipher the body language, play mind-reading
44 Introduction to case cracking analysis HEC October 2013 Philippe de La Chevasnerie -
3 Progress and end of the case
End of the case: elevator pitch
The CEO just passed by
can you sum up your approach and findings in 30 seconds?
Don't be surprised:
When you feel this is the end of your case prepare yourself
Organize your notes all along the case accordingly (cf. partial conclusion)
Take a deep breath and structure your answer
"The answer is"
"I cannot answer because"
Summarize the case, not the last 25%...
Give an answer to the initial question
Grand final: last spike of energy, structure and brightness !
45 Introduction to case cracking analysis HEC October 2013 Philippe de La Chevasnerie -
Written case (full-time only)
Format Format
Process Process
2 hours, with a calculator & paper
1 set of 5 10 documents
Emails
Academic articles
Data base
Interviews
etc
3 questions
To be answered within 3 5 slides
Final presentation (15 min)
Watch the clock!
30 min to read the documents: select your readings
30 min/question
Be ready to expose your finding at the end (10/15 minutes presentation)
Qualitative and quantitative