Most people dread case questions. But they don't have to be terrible, humiliating experiences. First, although you may think that you need to find that one perfect answer, there are actually several equally good, individualistic ways to analyze and answer each question. Second, interviewers are hoping that you'll do well, so often they give you hints and additional information to help work through the problem.
Last, and most important, attitude is paramount. The secret to doing well on case questions is to approach them with confidence and not overthink them or take them too seriously. The most successful candidates report that they went into the interview thinking that case questions would be a fun brainstorming session, an opportunity to be creative and discuss interesting ideas with smart people. You don't want to constrain your answers by worrying about whether your answer is "right" or not-you may worry yourself into a box. Since the interviewer will welcome almost any creative idea and you may hit upon a good idea by accident, feel free to throw out as many ideas as you can think of. You also will need to state your opinions with conviction so that you persuade the interviewer that you can be placed in front of clients and win their confidence.
Now let's cover each type of case question in depth.
Standard Case Questions
In the case question, the interviewer presents you with a hypothetical business problem and asks you for your opinion. Case questions mimic actual consulting projects and often are drawn from a case the interviewer has worked on. The case question is the most commonly used type of problem-solving interview question. It is also the longest segment of the interview, usually lasting at least ten to fifteen minutes. You'll want to seem calm, cool, and intelligent even though you're under significant pressure.
Remember; try to see the case question as an opportunity for fun rather than as a test. The back-and-forth of the case resembles more of a discussion than an oral exam.
The case question has fairly standard components:
- Opening--The interviewer briefly describes the business problem to you and what question you are to answer. You must demonstrate here that you are a good listener. Do not immediately jump to a response; instead, open with a framework for decision making.
- Your question--You are expected to analyze the problem by asking thoughtful questions in key areas that you think are important. The interviewer may use your questions as an opportunity to drive you toward the solution. Typically he will give you more information, at which point you can either analyze this information and ask for feedback or ask further questions. The interviewer will assess your creativity and your ability to process and analyze new information, pick out critical factors in the case, think on your feet, and interpret graphical or numerical data.
- In-depth exploration of a branch--If you've asked a question that is in an area the interviewer wants to explore, the interviewer may answer your question and then ask you a follow-up question that will explore this area more deeply.
- Analysis and conclusion--Generally a specific area of the mock client's business is critical to the solution of the problem. The interviewer will either drive you toward this area or let you know when you've reached it by asking you follow-up questions. He may present you with a final question that gets to the heart of the problem, and ask for your analysis. Always state your assumptions clearly if you are presenting an opinion.
- Communication--The interviewer may ask you to summarize your conclusion as if you were recommending it to the client in order to test your ability to communicate.
- A structured response-- Why is this important? Because it demonstrates that you think clearly and can make sense of an ambiguous situation, and because it allows you to remain composed.
- A broad perspective on the situation analyzed, mentioning all possible avenues of exploration and not focusing immediately on nitpicky questions or narrow paths that you think are right. Consultants call this "big-picture thinking."
- A concise and linear manner of thinking and communicating.
- Business judgment-- Demonstrate that you can identify and prioritize likely high-impact areas of the case to investigate first.
- Unusual and creative insights into the case--Show that you were able to come up with ideas proactively, without having the interviewer push you toward them.
Practice Case
1. Opening: A semiconductor manufacturer that has been increasingly profitable over the past three years has experienced a sudden decrease in profitability over the past few quarters. How would you analyze what's happening?
At this point, the recruiter is looking for big-picture thinking and structure in your response. Don't jump immediately to what you think is the right answer based on some past experience you've had, because chances are it isn't. Do not get stuck on one answer this early in the interview! You'll have a chance to drive to a conclusion later on. Take a few seconds to think about how you will structure your response. Use a framework to break down the problem into parts. This is a profitability problem. Either costs have risen or revenues have decreased, so the revenue-cost framework is a good approach here.
Mention your framework and several possibilities and then ask questions that will help you decide which part of the analysis you want to focus on.
"If profitability is decreasing, there could be problems either with the company's sales or with its costs. On the sales side, I would examine the company's sales to determine whether there has been a downturn and when it occurred. On the cost side, I'd like to see their cost structure and analyze how that's been changing over the past few years. I would find out whether that breakdown has changed and which costs have gone up. Do we have historical data on their sales and their costs?"
2. Exploring one branch deeply: The interviewer responds: Actually, their costs have been pretty stable lately. But let's say that they have seen a drop in sales. What measures or indicators do you think you should look at to analyze what's happening to the manufacturer's revenues? You've mentioned sales trends, but what else are there?
You now know that the interviewer is interested in pursuing revenues, not costs. Take this hint--do not stubbornly insist on returning to the cost side. You can tell from the phrasing ("what else?") that he is fishing around for specific answers. Open your mind to any possibility you can think of; don't dismiss ideas because you're afraid they're too simple. Many candidates hurt themselves by failing to mention all their ideas.
The interviewer is again testing your ability to prioritize information and bring up the most important things first. For example, if in this example you thought of two sales indicators, total market share and sales of specific product lines; mention the high-level indicator first-total market share. Explain your answer fully. What interviewers don't see, they don't know: They won't understand that you have insight into the case unless you explain your reasoning. Remember, the interviewer is testing your ability to analyze the situation logically.
"Well, I think it's important to look at market share to see whether the revenue downturn is specific to the company or to the industry as a whole. If the company's market share is stable but its revenues have gone down, that means the entire industry's revenues have decreased. If the company's market share has decreased, then they're losing business to competitors, and they would need to address that problem."
3. Processing a new piece of data: That's a good point. How would you interpret data saying that the company's market share hasn't really changed and that their number of units shipped was staying level in the period of falling revenues?
Now is the time to get specific! The interviewer is testing your willingness to take a position, to craft a hypothesis based on the new data provided. The interviewer is watching to see if you have a facility with business concepts and quantitative data. Use the data provided to craft a specific hypothesis.
"The data suggests that the entire industry is showing decreasing revenues and the company's problem is not unique. Also, since until shipments are level but revenues are falling, the company's price per unit must be falling. That would suggest to me that the company is lowering its prices. Maybe there is too much supply in the market? Probably all the companies in the market are feeling the effects of an oversupply, since the company's market share isn't changing."
How would you interpret the fact that all the companies in the market are within a 4 percent pricing band? What does that suggest about the type of market this is?
"That would suggest that this semiconductor product is a commodity, because there is extremely little differentiation among products and therefore among pricing. If some companies were able to charge a lot more for the same product, it would mean that their product was somehow better. Customers would be paying a premium for that added value. Industries with more differentiation would show a greater range of prices. The fact that this is a commodity market also would explain why prices are dropping fairly evenly among all companies and therefore revenues and market share is not changing. If this were a noncommodity product, then the impact on prices would vary according to the company's product."
Let's say that in addition to what you've found already, you see data that shows that although a competitor's revenues are falling, they're not falling as sharply as the company's revenues. How would you explain this?
Now the interviewer is throwing in a little twist, a piece of data that contradicts the scenario laid out so far, to see how you will respond to a sudden challenge. He is testing your calm under pressure, your analytical skills, and your ability to see the other side of the issue. You need to be able to derive a conclusion from this data and find your way to an answer. You'll want to analyze the situation deeply, but don't get lost in the details; always keep in the back of your mind the question that was asked.
"I guess I would have to ask, is the competitor's product less sensitive to price fluctuations, and if so, why? If the competitor's prices are not falling as sharply as the company's, the answer might lie in the product. Perhaps the competitor has added value that makes their semiconductors more valuable to the customer-add-ons like great customer service or quality. If the competitor's prices are falling as fast as the company's, then you have to think that perhaps their market share is increasing or that their total revenues are supplemented by some other product that is not doing as badly as this semiconductor product is. The competitor is basically more diversified."
4. Coming up with a conclusion or solution, and recommending it to the client. Okay, say that you are right on your first explanation of the problem: The competitor is both better diversified and his products have more added value. What solutions would you suggest to the company, and how would you implement them? How would you describe these recommendations as if you were speaking to the client?
In this last step, the interviewer is testing whether you can come up with a realistic solution for the client. This involves good judgment and perspective. He wants to see a range of solutions that are logical conclusions from your previous points. And he wants to see that you are thinking about cost-benefit trade-offs, that you think about the client's profitability before implementing a solution. Finally, the interviewer is assessing your ability to communicate in a clear and concise manner.
"I would say to the client, you are in a commodity industry that is vulnerable to price shifts caused by changes in supply and demand. If you want to hedge yourself against price downturns, you might want to consider diversifying your product line into higher value-added products or offer specialized services along with your existing products. We could examine what the customer values and would be willing to pay for and perform a cost-benefit analysis to choose the types of new goods and services to offer."
"We should find out what the customer truly values and would be willing to pay extra for. This would involve customer interviews or surveys and an examination of what exactly the competitor provides. The customer might value increased timeliness or fewer defects in the product. Perhaps they'd like scheduling flexibility or better payment terms. If it was decided that quality and timeliness were the issues, then you'd want to review your processes to see exacdy how you can improve. Timeliness could be improved by increasing inventory. Or quality could be improved through a better testing process. In both cases, we'll want to weigh the cost of making these changes-in time, money, and opportunity costs-against the predicted revenue increase you'd get for them."
Again, cover up the responses and try to think through the major issues of this case yourself. When done with one part of this case, move on and uncover the next part.
1.Opening: Your client manufactures electric switches that are put on machine tools as an emergency, fail-safe mechanism to stop the machine if necessary. Your client has $600 million in revenues and for ten years has remained flat in terms of revenues and profits. You've been hired to generate profitable growth for the company. Where would you start? We have access to some data, so you can ask me questions.
The main focus here is growth, so you might structure your first response by suggesting several broad growth strategies, each of which can be evaluated.
"There are several ways to grow a business. We could take market share away from a competitor, stimulate primary demand and therefore increase the size of the market as a whole, or use our technology to develop new products and therefore expand into a new market. We could look at each strategy and see how well it fits with the current market conditions and dynamics of this industry."
2.Explore one branch deeply. At this point, the interviewer would ask you which one of your three suggestions you'd like to pursue, and then you could talk about the pros and cons of each suggestion. More likely, the interviewer will suggest a path to follow and ask you to evaluate that option: This is just a switch manufacturer. They can't do much to affect primary demand. And they're not very technological. So that leaves the third option-let's look at increasing market share. How would you go about analyzing that option? Here is some data for you to look at-the current competitors and their respective market shares.
Your client is Company B. Also, I will tell you that the switch market has been flat and that there are only three companies in this market, all of whose market shares have been stable. No company has been gaining market share at the ex pense of others. But first, by the way, what is the total size of the switch market in revenues knowing these numbers?
The interviewer is slipping in a test of your quantitative skills before you get to the question about market share. You know that 30 percent of the market is equal to $600 million, because the interviewer previously mentioned that your client, Company B, generates $600 million in revenues. So you know that 10 percent of the market is equal to $200 million. So 10 times $200 million equals $2 billion, which is the total size of the market.
Great. Now let's get back to our question--how would you increase the company's market share?
Now, in order to figure out how to increase market share, you need to figure out what is compelling to customers to make them switch to your switch from a competitor's. If your product is very different from your competitors' products, you could try to convince customers based on superior product characteristics. If this is a commodity market, price could be a compelling reason for switching, so you could ask the interviewer a question to determine whether it is a commodity market.
"First, I'd want to figure out whether this is a commodity business, because if it is, then price is very important. Commodity means that one product is replaceable with another very easily, so I want to find out if there are any major differences that would keep a potential customer from changing from a competitor's switch to my switch."
On an engineering level, there is no difference between the products. Physically, a customer could very easily take a competitor's switch out and put yours in, or vice versa. But you haven't seen much of that kind of switching. As a matter of fact, your customer base hasn't changed in ten years.
So although there is no physical differentiation between products, there is something that differentiates the switches from each other. You should probe into this.
"I'd want to find out why customers are so loyal to a particular vendor. I'd like to ask our existing customers about what is important to them in a switch manufacturer."
3.Processing a new piece of information. Customers have been using your switch for years and they love it. It's a very small but important part of a very expensive machine. Because it's an emergency switch, any failure could lead to injuries and lawsuits-a risk nobody wants to take. They've never had a problem with your switch and will change vendors only if there is a quality problem with your switch.
Here's some key information! You now know what drives the customer's decision and can plan a strategy. Note that this strategy is actually not market-share focused: Rather than trying to gain new customers, you will increase revenues by raising prices for existing customers.
"If the customer is obsessed with quality and doesn't want to switch to a competitor for fear of lowering quality, maybe there is room to raise our prices without scaring them away to a competitor. What do prices currently look like in the market?"
4.Coming up with a conclusion or solution. Their prices look like this. What recommendation would you make regarding prices?
Obviously, your client's prices are not as high as they could be. For example, Company A is getting away with a $21 price, so maybe you could raise prices as well. So you need to determine how much the price can be raised. Instead of sticking to one number, propose a mechanism to determine a range.
"My basic recommendation to the client would be to raise prices, since we have a captive group of customers and Company A actually is charging more for the same product. A fair amount of research would need to be done to determine the optimum price point, but we could start by defining a range. Company A is charging $21 and still has 60 percent share, so $21 is definitely okay. So we could use this as a benchmark and at least raise prices by 5 percent to $21 and not lose any customers. Determining the high end of the price increase is a little more complicated, and we probably should look at what percent of total machine costs the switch represents in order to figure out how much more the customer could bear."
There may be some other discussion, but that would be icing on the cake. You got the main point of the case!
The biggest myth about number questions is that they assess your quantitative skills. In fact, they test your number-crunching ability only marginally-- basically, your multiplication and addition skills. Most interviewers don't even know the right answer to the number question. They couldn't care less. They are examining instead the logic you use to move from one step to the next, your creativity, and your ability to perform simple multiplication and addition. In fact, the interviewer would rather that you arrive at a wrong number with a good analytical technique than provide the right answer because you just happened to learn it in class last week.
A typical number question asks you to estimate something through a rough ("back-of-the-envelope") calculation. You are supposed to reach your end calculation through a series of narrowing assumptions. The assumptions may or may not be true in real life; that is irrelevant. Interviewers won't give you any real data to help build assumptions, nor do they like it if you ask for data. It is important to develop a line of reasoning you will use to proceed through the problem and then explain the logic behind each successive assumption you make. It's fine to take a few seconds at the beginning of the question to think up your approach. As you're progressing through the calculation, you will narrow your numbers further.
A couple of tips for number questions:
- You are determining the numbers. Pick estimates that allow you to easily do math in your head. For example, choose round numbers such as 50 percent instead of 55 percent. Choose combinations that are easy to work with: 30 percent of 120 instead of 33 percent of 120.
- The multiplication and addition in these questions are very elementary, but if you freeze under pressure, try to do some practice beforehand in doing math in your head. Otherwise, ask the interviewer if it would be okay to take notes during the interview.
- It helps to know a couple of basic facts that you can work from on any question. You should know the population of the United States (250 million).
- Start with key drivers of the object you're estimating, then think of substitutes for that object that would lessen your estimate.
- Don't forget to finish the question. Many candidates do well until the very end, when they forget to convert their answer to the right number of units or otherwise answer the question asked.
- How many gas stations are there in the U.S.?
- How many bagels do Americans eat every day?
- How many children are born each day in the U.S.?
- How much does a fully loaded 747 weigh?
How many tombstones were sold in the U.S. last year?
Strategy 1: Break It Down
2.5 million deaths
I
2 million buried
I
1.5 million gravestones
- I would first try to figure out how many people in the U.S. die each year. I know that the U.S. population is around 250 million, and I would guess that about 1% die each year. 1% seems reasonable to me given the size of the elderly popula-tion. 1% of 250 million makes 2.5 million deaths each year."
- "Now I have to figure out how many of those people are buried. If we assume that the majority of Americans are still buried, and perhaps only .5 million of that 2.5 million are cremated, that leaves 2 million who are buried."
- "Then I want to find out how many are buried with grave-stones. Out of the 2 million, let's assume that some are buried with grave markers besides gravestones. Let's say that 75% are buried with gravestones. So my guess is that 1.5 million tombstones are sold in the U.S. each year."
- "If I look at the town of [Town], Ohio, I think that there are about two mortuaries serving a population of 25,000 people. Those mortuaries probably do about 3 funerals each per week, and I think that most deaths in [Town] are handled by them. That makes a total of 24 people dying each month and about 300 people dying each year in [Town]."
- "Let's say that 50 of the deceased are cremated, since burial is still more popular. That leaves 250 people who are buried, of which I think the majority, probably 4 out of 5, are buried with a gravestone of some kind. So that means 200 gravestones are sold each year in [Town]."
- "If we assume that [Town] is a representative sample of the rest of the country, which I think it is based on its demo-graphics, then we can extrapolate from [Townj's numbers. Since [Town] has 25,000 compared to a U.S. population of 250,000,000, then [Town]'s 200 gravestones suggest a total of 2 million gravestones sold in the U.S. each year."
Brainteasers
Brainteaser case questions seek very specific and structured answers and are therefore more close-ended than normal case questions. You need to demonstrate the same qualities as you would in a normal case question: logical thinking, clear communication, and creativity. Here is an example of this type of question:
- Why are man hole covers round?
- Because you can more easily transport a round cover by rolling it around on its edge.
- No matter how you place it in the hole, it fits without needing to be rotated.
- Because a round object will not fall into a similarly shaped hole, whereas any other shape would.
- If you had to choose the CEO of a truck manufacturing company, what factors would you consider? Would you choose someone from marketing, finance, or operations? How would your answer change if you were choosing the CEO of an advertising firm?
- A manufacturer/retailer of baby clothes has seen its retail sales plummet over the past two years. How would you identify the cause of this problem, and what would you recommend that the company do?
- If you were considering moving an insurance company's location from City A to City B, what factors would you take into account to make the decision? City A is an urban area on the East Coast, while City B is in a rural area also on the East Coast.
- An American satellite services provider wants to enter developing countries in Asia, specifically by providing telephone service to consumers through satellite links. What does the company need to know before making the decision to enter this market? If it chooses to enter, what might a good strategy be?
