Case interview approach

What is a case?
Description of business situation Open-ended Usually taken from a real situation Designed to measure Problem solving Tolerance for ambiguity Communication skills

What do recruiters look for?

Problem solving Logical reasoning Creativity Ability to synthesize Basic numerical agility Intuitive business sense Tolerance for ambiguity Broad thinking Structure Prioritization Implications of decisions Communication skills Well thought-out questions Explanation of conclusions Good listening skills

Different types of cases

Classic cases Impact on company of a consolidating industry? Should Company X add capacity? How should Company X react to a new competitor? Should Company X enter/exit a new/old market? Purpose Broad functional skills Big picture perspective Comfort with details, analysis Purpose Comfort with ambiguity Creativity

Special cases Why are manhole covers round? Estimate a weight of a 747

McKinsey case examples

Demand for AA Batteries
Background You are on a flight to London and find yourself seated next to the new CEO of the AA Battery Company. He will be meeting with a group of important stockholders as soon as the plane lands, and asks you to help him estimate the total U.K. market for his new companys flagship product (i.e., AA batteries) Question You try to use the AirFone to call your offices library, but the flight attendant informs you that it is out of service. How would you estimate the annual U.K. demand for AA batteries?

Cruise Ship Operator

Background A major cruise ship operator has retained McKinsey to determine if it should build a new luxury cruise ship. We have been asked to begin our work by analyzing the future demand for cruises. Essential facts include: Half of the operators (including our client) are earning a small profit; the others are operating with losses There are 8 major cruise ship operators. The largest has a 25% market share; number 2 has 20%; our client has 15%; the remainder is divided among other competitors Prices have declined over the last 2 years Construction of the cruise ship will take 3 years Question You are a member of the McKinsey team assigned to this project. How would you go about structuring an analysis of the future demand for luxury cruises on the clients new ship?

University in Trouble
Background The President of a large university has asked McKinsey to help him get the university back in the black. Specifically, the university has been operating at a deficit for the last 2 years, and it must either reduce costs or increase revenues to eliminate the gap. Essential facts include: The university is comprised of an undergraduate school and graduate medical, law, and business schools Total university enrollment has not changed substantially in the last 5 years Annual operating costs have increased with inflation Tuition represents roughly half of total annual revenues Question You are a member of the McKinsey team assigned to this project. How would you structure an analysis aimed at eliminating the operating deficit?

Approach to answers
Demand for AA Batteries
The best answer will generally start with some macro-measure, such as the U.K. population, and then proceed to estimate the number of batteries used by each person. For example, one might first identify the type of tools or appliances that use AA batteries, then estimate the number of batteries used by each appliance, and then consider the different lifetimes or replacement cycles for batteries used by each appliance. The very best answers will often apply a sanity check once a figure is reached (e.g., That would mean everyone buys 100 batteries per year which sounds too high). Alternatively, one could work this problem from a supply rather than demand perspective. Start by identifying the number of battery manufacturers, then estimate their total revenues, and divide by retail price to estimate the number of batteries sold. This approach is generally less intuitive, and more likely to cause one to pull a number out of the air for values like total revenue that are hard to estimate without more facts.

Cruise ship operator

The typical answer should be able to discuss some of the macro- and microeconomic drivers behind demand for cruise-days (e.g., general state of the economy, segment of the population that can afford cruises, sub-segment interested in cruises, number and length of cruises per person). If the interviewer chooses, the case is an excellent vehicle for probing where the candidate would go to find information or how he or she would estimate key variables. The best answer will recognize that capacity (supply) issues are as important as the demand for cruises. For example, they might question why some operators are losing money and the underlying reasons for recent price decreases. Some may conclude that the client should not build another ship because of over-capacity in the industry. Others may recognize that overcapacity exists, yet recommend that the client build the new ship to target the specific group of customers who are interested in luxury cruises particularly if that segment is not being reached today.

University in trouble
A good answer will recognize revenue as the key improvement lever and spend relatively little time on cost issues (e.g., to confirm that there are no unusual expenditures draining the coffers). Candidates should be able to discuss the major revenue sources for a university Tuition. Although total enrollment has not changed substantially, candidates should question whether tuition increases have kept pace with inflation Fund-raising. Candidates should question the effectiveness of the recent fund-raising campaigns Other operating income. Depending on the school, candidates may also discuss money raised by athletic programs and other sources of operating income (e.g., university stores, food services) In addition, the best answer will recognize that the problem may be at a specific college rather than at the university level. For example, a steady total enrollment may mean that decline in enrollments at more expensive, professional schools are being masked by increases at the undergraduate level.

A good approach to case interviews

Clarify Listen closely to problem definition Ask questions to improve understanding Paraphrase to confirm problem statement Structure Describe your overall approach Break the problem into discrete pieces State crisp hypothesis Use framework only if appropriate Analyze Walk the interviewer through your thinking Prioritize issues Ask relevant questions and request information State findings for each analysis Conclude Summarize the discussion Discuss trade-offs Develop overall recommendations Relate back to problem statement

Interview tips
What to do Relax! Rehearse before the interview Listen (take notes if you wish) Ask a few questions Structure, structure, structure Explain your thought process Work from hypothesis (guess a little) Gather and analyze key facts (80/20 rule) Push for a conclusion What not to do Force a framework that doesnt fit Jump to a conclusion without explaining your thought process Be sure you have the answer and ignore signals/hints from the interviewer Hide from the details (or the numbers) Get frustrated Do a postmortem (in or after interview)

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