MCG Casebook

2022-2023 Edition

Class of 2023 MCG Co-Chairs:

Aaron Avery, Emma Granowitz, Ginny Vick, Kiran Chen, Lauren Kasper, Marisa Filter, Pratik Bhatter

© 1995-2023 The University of Chicago Booth School of Business, Management Consulting Group, 5807 S. Woodlawn Drive, Chicago, IL 60637, USA. All
rights reserved. No part of this book may be reproduced in any form or by any means without written permission of the Class of 2023 Co-Chairs of the
Management Consulting Group. For more information about Chicago Booth MCG, please visit groups.chicagobooth.edu/mcg/home.
With thanks to our sponsors

Overview
The Management Consulting Group (MCG) at the University of Chicago Booth School of
Business would like to thank our sponsors for their generous support and continued

Interview Prep
engagement with the Chicago Booth community:

Platinum

Fit Interview
Gold

Case Interview
Silver

Resources
Friends

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Contents

Overview
Overview…………………………………………………. 4
Resources …………………………………………. 50
Interview Prep……………………………………………. 10

Interview Prep
Sample case frameworks…………………………. 52
Case Practice and Evaluation…………………………… 11 Supplemental case information………………….. 57
External Case Prep Resources………………………….. 14 Case math………………………………………… 64
The Fit Interview………………………………………….. 15 Clearing charts…………………………………… 69

Preparing for fit questions……………………………… 16 Industry Summaries……………………………….. 75

Fit Interview
Cardinal rules of answering Fit questions………………. 19 Firm Briefs………………………………………… 84

Common fit questions………………………………….. 22 Geographic Info Brief…………………................ 96

Fit story structuring examples………………………….. 25 Zoom Best Practices…..............………………….. 105

Case Interview
The Case Interview……………………………………….. 33 Practice Cases …...………………………………….. 109

Solving business problems………………………………. 35 Tips to give an effective case…..………………….. 110

Index of Practice Cases…..…………………........... 111
Common mistakes……………………………………….. 45
Library of practice cases……………………………… 113
Different case formats……………………………………. 46

Resources
Useful day of interview tips………………………………. 49

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Introduction: The Consulting Interview

Overview
Welcome to the Chicago Booth MCG Casebook!
You’ve made it! After a month of recruiting and hours of networking, coffee chats, and meet & greets, you are
ready to start preparing for interviews.

Interview Prep
The MCG Casebook is designed to help you as you develop interviewing skills and expertise. It offers practical
advice on how to approach a typical consulting interview, a resource bank which will be useful for developing
case skills, and most importantly, a set of 40+ cases to practice with your colleagues. This casebook is not meant
to direct you toward specific case frameworks, fit answers, or thinking patterns. As you will learn, no resource
can be the final word on what is ‘right’ or ‘wrong’ in this process.

Fit Interview
Organization of the book
The book will begin by providing a general overview of consulting interviews, followed by recommendations on
how to prepare and budget one’s preparation time. It will then explore fit and case interviews in more detail,
provide a set of case resources, and finally, include the practice cases.

Purpose of a consulting interview

Case Interview
A typical interview contains two parts: (1) the fit interview, and (2) a business case, lasting between 40-60
minutes total. The interviewer’s objective is to gauge the candidate’s interpersonal skills, comfort with
ambiguity, business sense, logic, quantitative skills, coachability and client-readiness.

Ultimately, the interviewer is looking for someone they would want to work with. Candidates often make the
mistake of thinking about the consulting interview in terms of two distinct sections – fit and case, but the
interviewer is in fact assessing the above qualities throughout both portions of the interview.

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As you prepare, remember to portray a confident, well-rounded, likeable self to the interviewer and try to enjoy
the process – you will learn a lot!

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Introduction: How should I allocate my recruiting time?

Overview
Please note that not everyone will follow precisely this allocation of time, and everyone will spend a different
total amount of time on recruiting, but this should serve as general guidance on order of magnitude how you
should be spending your time from now until the conclusion of interviews.

Interview Prep
ILLUSTRATIVE

Fit Interview
Case Interview
Resources
5
Introduction: Recruiting words of wisdom from alumni,

Overview
recruiters, and 2Ys
Being realistic is the key to managing your expectations properly. Have other recruiting plans that you are
genuinely excited about! MCG preparation lends itself well to other industry recruiting as well, including

Interview Prep
corporate strategy, entrepreneurship, and tech

Recruiting is a two-year process

Run your own race - everyone will prioritize their time differently and that is ok
Treat all 1Ys and 2Ys with respect as potential future colleagues

Fit Interview
Be kind and supportive to your classmates

Think twice about what you post in Slack

Don’t freak out about invite-only events plenty of people who do not get invites eventually receive internship
and full-time offers

Case Interview
You are never alone in your situation

Learn through the process

Engage yourself in academics / other extra curricular activities at Booth. Recruiting can get stressful if all you do is
recruiting

Do not attempt to ‘game the system’ by applying to an office location that isn’t of interest to you because you

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think it will be less competitive this is not a good approach and firms are watching for candidates who attempt
to do this

Take breaks and try to have fun!

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Overview: How to improve your chances of getting an

Overview
interview
Attend Meet & Greets, schedule (and show up prepared for) coffee chats with 2Ys and firm
reps, attend firm & MCG learning events and sessions. These will be the best forum for you to
get to know firms you’re interested in - and to find out more about the ones you’re not and

Interview Prep
Attend MCG, CS, and for them to get to know you)
Firm Events Cast a wide net on firms you network with even if a firm isn’t your top choice at first they
may be at the end of the process and you don’t want to already be out of the race
Failing to attend events for many firms will remove you from consideration

Make sure to ask for business cards (or their virtual equivalent) when you have a good

Fit Interview
Send Follow-Up conversation
Emails with intent Always send thank you notes; selectively ask for informational interviews and additional
connections within the office or firm

Ask firm reps, office reps, and OCRs to connect you with people within the firm/office for
informational conversations for example, you might say “It would be great to chat with
someone with [insert your background] that pivoted into [field/sector/industry of interest]

Case Interview
Set up informational would you be able to connect me with someone who’s taken a similar path?
conversations Schedule a 30-minute slot to talk more via phone/Zoom come prepared with a perspective
on how that firm has been active/involved in your topic of interest (DE&I, industries or
sectors/functions served, recent high-profile public projects, etc.)

Make your story and Notice your preferences as you learn more about each bank

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Continue to refine your story (Why consulting? Why this firm & office? Why would I be a
interests known, ask
good fit?)
questions, show Make your interests known but don’t be obnoxious about it that is the best way to make
enthusiasm connections and have discussions that are directly relevant to your decision

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Overview of the ‘fit’ and ‘case’ portions (1/2)

Overview
The “fit” interview

The ‘fit’ part of the interview is often Your story should flow logically: be

Interview Prep
underestimated in its importance. Although the Resume prepared to walk through the details of
case is unquestionably important, let’s face it, you overview your resume and explain the rational
can learn the skills that are needed to succeed as a behind your decisions.
consultant! But are you a right fit for the firm’s
culture? You need to explain why consulting
Why makes sense for your career progression

Fit Interview
If you can get the interviewer to be on your side consulting and how it will help you achieve your
during the fit, the case part of the interview is long-term goals.
more likely to go smoothly as the interviewer
already wants you to succeed!
Give specific reasons why you want to
join that firm and how firm values or

Case Interview
While the time allocated to fit varies among firms, Why firm
practices are aligned with your interests.
every firm will have an official fit portion. Your goal
should be to present yourself in a genuine and
cohesive manner. In general, the fit portion is
Your stories should demonstrate your
composed of four elements, presented on the right.
Personal leadership, problem solving/analytical,
experience working with others, and communication

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skills.

8
Overview of the ‘fit’ and ‘case’ portions (2/2)

Overview
The “case” interview The “case” interview

Consulting firms use case interviews as a proxy for

Interview Prep
the day-to-day job. Each case is used to evaluate a
Structured thinking in ambiguity
range of capabilities, mainly the ones presented on
Problem Combining various types of data
the right. Solving Analytical rigor
Business judgment
The case interview typically begins with the

Fit Interview
interviewer describing a business and / or client
Articulating complexity
situation. The candidate’s job is to work through Client Prioritizing issues
the information, develop a framework to approach readiness Communicating assertively and with
the problem, and refine a hypothesis through confidence

Case Interview
analysis as additional information is provided.
Ability to deal with pressure
Personality Confidence and relatability
Structured brainstorming, mathematical
reasoning, and analyzing data will be used to hone
in on a recommendation, which the candidate will

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present succinctly at the end of the case.

9
Interview Prep Overview

10
Interview Prep: General tips on how to prepare

Overview
.
Timeline Tracking your progress

The amount of time required to successfully prepare for a As you practice, it is important to keep track of the

Interview Prep
consulting interview varies. Many Booth students do over feedback you receive and review it periodically. By
20 full practice cases. reflecting on your cases and internalizing feedback from
Most students begin interview preparation in November others, you gain a much better sense of where you stand
(right after 1Y Consulting Forum), starting cases with other and the trajectory of your development.
1Ys, then 2Ys, and eventually with firm reps (if available). If We recommend you keep a case log of all your cases,
you are applying to international offices, you may want to recording after each:
begin your prep earlier, since interviews can take place The case name and interviewer (put a cover page

Fit Interview
from one to four weeks ahead of on-campus interviews. on each case).
Make sure you do a wide variety of cases which will give Your framework (and / or the framework you wish
you exposure to a variety of functions (strategy, marketing, you had developed).
operations, etc.) and industries (banking, consumer Key information, calculations, or analyses you
packaged goods, telecommunications, transport, etc.). missed.
Be careful not to burn out from doing too many cases and, Top three goals for your next case.

Case Interview
as a result, become robotic you should be excited and As you experienced during GMAT, the review process is as
enthusiastic to dive into every case!! important as the actual case session and you should spend
as much time reviewing your feedback as you spend
Expectation actually doing cases.
Performance

After each case, spend some time redoing the case and
Reality reviewing your framework, your calculations, your
brainstorming and your recommendation. What could you

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have done better in each one of them?

# cases

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Interview Practice

Overview
Interview Prep Overview Tips on Giving a Case

Breaking the ice 1-2 min While you might not feel inclined to give cases at

Interview Prep
Fit questions 10-15 min the first moment, giving cases is a great way to
learn different ways of thinking, different
Case prompt & questions 1-2 min
framework and brainstorming ideas. With time, you
Framework 1-2 min will also identify what looks good and what looks
Case math 7-10 min bad in an interview.
Brainstorming 7-10 min Prioritize giving a case you have already done, if
Recommendation 2 min not, make sure you go through the entire case on

Fit Interview
your own, including the calculations, otherwise it
Feedback (only for case prep) 20 min will be difficult to provide accurate feedback.
We recommend learning at least 2-3 different
cases well and giving those to all case prep partners.
Tips on Receiving a Case
Your ability to give solid feedback will increase as
you become more familiar with the case and as you

Case Interview
Make sure your interviewer has enough time to
give you case and detailed feedback (aprox. 60 min). can compare different performances.
Review the case step-by-step and ask the
interviewer what you did well and what you could Practice format
Towards the beginning of your prep, you might
have done better in each step of the case.
Write down feedback and ask interviewer for prefer to stop at points within the case in order to
advice if you observe a repeated mistake on your give advice, retry calculations, repeat delivery of
your recommendation, etc.

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cases.
Always thank the interviewer for their time and As you improve, you will want to run through the
feedback! This might the first of many cases of you entire case as it would be presented in an interview,
two! giving feedback only at the end.

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Case Evaluation

Overview
❑ Framework is mutually exclusive, collectively exhaustive (MECE). Make sure the same
Structure and information is not in two different buckets.
❑ Framework is customized not entirely generic. Revenues from oil barrel sales is different
framework

Interview Prep
than just “revenues .
❑ Framework was used throughout case to guide discussion
❑ Quick and accurate calculations
❑ Organized information in a structured way
Analytical and
❑ Interpreted graphs and tables accurately, drawing insights quickly
problem solving ❑ Able to keep complex fact base organized and structured
❑

Fit Interview
Creative in evaluating issues, possible causes and drawing conclusions

❑ Conveyed conclusions logically and succinctly

Synthesis and ❑ Conclusions were compelling and backed with evidence developed during the interview
conclusion ❑ Comprehensive, captured all relevant points discussed during the case and answered all
questions

Case Interview
❑ Verbalized thought process and communicated thinking at every stage of the case
Communication ❑ Communicated in a crisp and concise manner without rambling or wandering
skills ❑ Built strong rapport with interviewer, case discussion was more a conversation than a
monologue

❑ Drove the case discussion, assuming an active rather than passive attitude

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❑ Confident and relaxed
Presentation
❑ Enthusiastic and engaging

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External Case Prep Resources

Overview
In addition to this casebook, you may want to check out other interview preparation resources. Here are some
resources Booth students have found useful in the past:

Interview Prep
Fit Interview
Books like, Case in Point, by David Online resources like
Listening to podcasts on Spotify Cosentino, Case Interview Secrets, by Victor rocketblocks that can assist in
like Strategy Simplified and The Cheng and Crack the Case by David Orhvall improving specific segments of
Case Interview casing through drills

Case Interview
Resources
Career Services media site: Career Services Firm specific websites: many consulting Casebooks from other schools: Some earlier
firms include case preparation materials on editions of these have been published
has archived videos of case interview
their external websites. These can include externally and can be found online via
demonstrations from prior interview
practice cases and video examples of Google. Notable books include Ross (2005
events.
various potential solutions. and 2006), HBS, and Wharton (2009, 2010).

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The FIT / Behavioral Interview
The Fit / Behavioral portion of the interview is just as important
as the case portion. Do not under-index on preparation.

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The Fit Interview: Personalize your candidacy

Overview
Most consulting interviews will begin with some questions which allow the
What is the main
interviewer to understand more about the candidate’s background and assess
objective?

Interview Prep
the candidate’s fit for consulting and ‘fit’ with the firm.

The fit interview offers you the opportunity to personalize your candidacy. You
Why should they should focus on telling a cohesive story: what led you to business school, why
hire you and not you are interested in consulting, why you are interviewing with this firm in this

Fit Interview
someone else? location, why you believe you can add value as a consultant, how the role fits in
your long-term professional goals, etc.

Booth consulting recruiters have consistently reported that students don’t focus
enough on preparing for the fit interview. Use the fit portion of the interview
What do recruiters
to show your passion for the firm and show off your track record. Firms expect

Case Interview
say? that you know yourself well. Save 2-3 weeks before interviews to prepare your
stories and tailor your answers to each firm!
In addition to understanding yourself, you should also understand the firms.
From the firms’ websites, corporate presentations and networking events, you
should have an understanding of what a firm prides itself on, what
Why do you want

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differentiates it from others, and most importantly, its culture. You should
firm X? ailor o r s ories o ha o e learned abo he compan You should also
have a good understanding of the firms’ business models and organizational
structures.

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The Fit Interview: Two categories of questions

Overview
Professional questions Behavioral/Character
Behavioral questions Questions

These questions are used to evaluate the trajectory of Behavioral questions are used to profile your ability to

Interview Prep
your career, how you affected that direction, and cope with complex, challenging situations. They also
where it looks to go from here. Professional questions allow the interviewer to examine the depth of your
will probe into your: professional and personal experiences. These
questions will probe into:
Work history
Past experiences and accomplishments Challenging situations and your response

Fit Interview
Personal interest or motivations for pursuing Your potential to create impact
consulting Personal thought processes in difficult
Reasons for applying with this specific firm circumstances
Location choice Experiences working in teams
Aspirations for your career in the short and long Leadership experiences

Case Interview
term

Example professional questions: Example behavioral questions:

Why is management consulting a good fit for your Describe a major professional failure and how you
career? dealt with it.
What do you hope to learn at our firm? Tell me about a time you have used data to change

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How have your past experiences prepared you for someone’s mind.
consulting with our firm? What is the most challenging team environment
you’ve worked in?

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The Fit Interview: Preparation process

Overview
Structure your stories

High-Level Overview = Give interviewer a sense of

H

Interview Prep
overall story and your role in the story The goal of your stories should be to convey your
personality, poise, confidence, capabilities and
Situation = in a sentence or two, describe the
S leadership ability concisely in 90 to 120 seconds.
situation / context / environment
Keep in mind that even during this section, you are
O Obstacle = briefly define the obstacle to be being tested on your ability to think and
resolved communicate in a logical manner, so it is

Fit Interview
A Action = describe in detail the action you took important to keep your answers concise and well
structured. Spend most of your time talking about
Result = discuss the outcome of that action and its the actions you took; minimize the time you spend
R impact on the client / team, etc. discussing the situation and / or obstacle.
Learning = describe what you learned from the
L experience / situation

Case Interview
Other tips
Create a spreadsheet with your top 5-10 stories, that highlight different situations, personal qualities, and skills (i.e.
leadership, teamwork, difficult team/client, persuasion, use of data, etc.) organized according to the H-SOAR-L framework
Create written outlines of your behavioral answers, using four or five sentences. The first sentence in this approach is the
“newspaper headline . The next few sentences concisely summarize the main components of the story that will be discussed
(the actions you took). The final sentence should reiterate the results / impact of your experience and what you learned.

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If you are preparing for the McKinsey PEI (Personal Experience Interview), be prepared to go deep into several of your stories
and detail your thought process, your feelings, reactions of others and how you responded (what you said / did) in each
story.
We recommend incorporating fit into your case prep early and often. Try to add one to two fit questions into every case
prep session two are included at the start of each practice case in this book!
18
The cardinal rules of answering Fit interview questions (1/3)

Overview
You might need to adjust your stories to fit the question be prepared for this. For
Make sure you
example, the answers to “tell me about a time you had to persuade someone and “tell
answer the me about a time you had to deliver a difficult message are likely not the same answer.

Interview Prep
interviewer’s When you’re thinking through which story to tell for Fit questions, start with “does this
question story answer the question or “how can I make this story fit the question?

Interviewers want to know what you did in the context of a team/project/initiative. It is

Make sure you important to make sure you are very clear on your contributions. The Fit interview is a

Fit Interview
focus on your time to show off all the wonderful things you have done, which can be uncomfortable
contributions / but is a necessary hurdle to clear. You should give credit for team effort and discuss
accomplishments how your actions made others feel (or behave), but make sure you emphasize your
contributions to that team effort (how is the team better for your being there?).

Don’t be these memes. Tell your stories in

Case Interview
their best light and emphasize your
Do not lie or contributions and accomplishments, but
overly exaggerate avoid misrepresenting your role, as that
can harm your interview performance.
Remember that contractions can be deadly

Interviewers will be looking for candidates who not only structure their frameworks and

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Always be brainstorms during a case, but can also think logically and structure their storytelling. See
Structuring the many examples in this section of how co-chairs from this year and years past have
gone about ‘structuring’ their stories.

19
Source: MBA_ish
The cardinal rules of answering Fit interview questions (2/3)

Overview
You should have multiple possible responses to most of the common behavioral
questions, and particularly for those ‘top ’ questions. You can re-tell stories between
Have multiple rounds (first round interviews and second round interviews) but you cannot tell stories

Interview Prep
stories prepared multiple times within a round, or tell the same story to answer different questions in the
for most common same round. Interviewers from the same firm may ask you the same behavioral
questions questions in back-to-back interviews and you need to have two distinct stories ready to
share. Interviewers may also ask you to tell them a different story after you’ve started
telling your ‘ st choice’ story, and you need to be prepared to pivot on the fly to another
story that fits the question.

Fit Interview
Interviewers are trained to listen for authenticity (or lack thereof). Being authentic and
thoughtful will stand out over inauthentic answers. For example, do not tell the
Be authentic (and
interviewer that your greatest weakness is that you work too hard or are too ambitious
thoughtful) in (unless these are, in fact, your weaknesses). It is much more powerful to be genuine in
your answers your responses and even show some vulnerability as it demonstrates self-awareness (so

Case Interview
long as it includes what you’re doing to improve and grow

Many interviewers will ask follow ups about your behavioral stories be excited for
these! It shows the interviewer is engaged and listening, and something you said caught
Prepare for their attention and they want to know more. As you go through the interview prep
follow-ups

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process, try to think of (and get feedback from other Boothies on) potential questions
interviewers may ask in response to a story.

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The cardinal rules of answering Fit interview questions (3/3)

Overview
While you need to have multiple stories that can answer each prompt, the same story
Quality over can likewise answer multiple prompts. You can’t use the same story twice in the same

Interview Prep
quantity round, but the same story can flex to answer different questions, especially between
interview rounds.

Try to tell your story in 2-3 minutes max. Do not spend 5 minutes answering the question
instead make sure you give the interviewer the main points (sparknotes) of your story,
Be Concise and give them the chance to ask follow-up questions if they want to hear more details

Fit Interview
about a specific part of your story

Weave elements of the firm and office culture into your answers where possible. Many
Tailor to the firm firms (especially McKinsey) are very transparent about the characteristics they are
and office looking for make sure your stories touch on those characteristics when interviewing
with those firms.

Case Interview
Remember the person on the other side is a human too. While they are there to evaluate
you now, they may also become your best friend when you join the firm. Engage them in
Relax your stories, let your personality come through naturally, and get excited for their
questions they just want to know you better, and you have greatness to show them.

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21
Top 10 Fit questions to prepare for

Overview
You should prepare and practice answers to all common questions on the next slide, but make sure you’re able
to answer the below questions in a succinct and compelling way, tailored to your experience and interests.
Remember to leverage H-SOAR-L in answering these questions, and shoot for 1-2.5 minutes to tell the full story.

Interview Prep
1. Walk me through your resume (no need for H-SOAR-L)
2. Why consulting / why [xyz] firm / why [xyz] office (no need for H-SOAR-L)
3. Tell me about a time when you faced a significant challenge
4. Tell me about a time when you dealt with a conflict with your

Fit Interview
team/manager/client
5. Tell me about a time you had to persuade your team/manager/client of
your idea
6. Tell me about a time you failed (and what you learned from it)

Case Interview
7. Tell me about a time you had a large impact on a
team/teammate/project
8. What is your proudest accomplishment (not necessarily professional)
9. Tell me about a time you had to deal with ambiguity/operate under a
tight deadline

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10.Tell me about a weakness you have / a challenge you face
professionally?

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Common Fit Questions

Overview
Professional questions Behavioral questions
❑ Tell me about yourself/ Walk me through your resume ❑ What accomplishment are you most proud of?

Interview Prep
❑ Tell me who are you, not in your resume, that I can read ❑ Tell me about a time you have used analysis to guide your
❑ Tell me more about [a specific bullet on resume] decision making process.
❑ Why Consulting? ❑ Tell me about a time when you had to persuade someone
❑ Why did you choose Booth? (team/client) to do something they initially did not want to do.
❑ Why Consulting? ❑ Tell me about a time when you had a disagreement with your
❑ Why Firm X? boss/team and how you handled it.
❑ Why firm X over other consulting firms? ❑ Tell me about a time when you had to lead a team through
❑ Why city Y? What parameters did you use to evaluate? significant change.

Fit Interview
❑ Which classes have you enjoyed the most and why? ❑ Tell me about a time when you had to deal with a difficult
❑ What does management consulting mean to you? teammate.
❑ Who do you look up to professionally and why? ❑ Tell me about a time a time when you had to deal with an
❑ How would you evaluate the business of one of your previous ambiguous situation.
employers? ❑ Tell me about a time when you had to work with a lot of
❑ What do you like to do for fun? ambiguous data and how you handled it.
❑ What are three qualities your friends would use to describe you? ❑ Tell me about a time when you worked with people who
❑

Case Interview
What are your major strengths? approached things differently than you.
❑ What are your short and long term goals? ❑ Tell me about your biggest failure and what did you learn with
❑ Where do you see yourself in 5-10 years? that.
❑ What are your areas for improvement (weaknesses) and have you ❑ Tell me about a time you’ve faced a challenge at work and what
been working on them? have you done to overcome it.
❑ What distinguishes you from other candidates I am meeting today? ❑ Tell me about a time you had to make a difficult decision.
❑ What is one thing you want me to remember/ask/know about you? ❑ Describe your dream project
❑ How would your co-workers / classmates describe your leadership ❑ Looking back at your professional experience - what is the one
style? thing you would change/ do differently?

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❑ Why should I hire you? ❑ What was the worst team you have had and why do you think it
was bad?
❑ Tell me about a time when you set your goals too high? (too
low?)

23
Tips to practice for behavioral interviews / questions

Overview
As you ramp up on behavioral prep make it routine to start every practice interview with several
behavioral questions before moving into the case portion
Start practice Treat the behavioral portion of the interview as you would the case portion let your interviewer

Interview Prep
early and make it know what you want to work on, track your progress, and seek out detailed feedback (leverage
a habit when the template in the MCG Google Drive)
Practice your behavioral answers with multiple people to make sure the core of the message and
casing the delivery lands for different backgrounds and personalities
Have practice interviewers ‘tell your story’ back to you and say what stood out to them

Practice multiple

Fit Interview
If you have stories that fit multiple prompts, or multiple stories for a given prompt, try practicing
answers to the with different combinations to see which lands most effectively
same behavioral Remember that your story does not have to necessarily be unique, but it does need to be authentic,
prompt individual-oriented (about you), and answer the prompt

Write out your stories to help refine and structure them, and to make sure the core elements and

Case Interview
Write out and takeaways are clear
structure your Word of warning: do not memorize a script for prompts. You want it to be a conversation and to
be passionate about your story!
stories
We have included multiple examples on how to approach this in the following slides

[2020-2021 hopefully exclusive advise] barring some miracle, you will be interviewing by Zoom (or
Record yourself other telepresence medium) and we suggest you record yourself giving your behavioral answers

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on Zoom (both by yourself and when in a practice interview) to see and hear how you present it may help
you find ticks, filler words, or other elements to address before going in for the real deal.
Keep language relatively straightforward, limit (previous) firm-specific acronyms, stay focused on the
Keep it simple core contents of your story without too many descriptors

24
Example of Fit interview prep approach

Overview
This is not necessarily the best or only way to prepare for the Fit interview, but it is one possible approach
For reference – this is meant only to demonstrate 1) a method of documenting and structuring your stories and 2) an example of the level of detail that
can be cut from your story to fit the expected answer timeframe.
Question: Tell me about a time you had to deal with ambiguity / had to manage complexity

Interview Prep
Full-Text Answer / Details Interview Response Text (1-2.5 minutes)
We were brought into a retailer who had invested in fixed asset capacity on forecasted growth that did not I’d like to tell you about when I helped a retailer identify a new
H materialize and wanted to develop a playbook for what to do with this excess capacity. I was specifically
responsible for 4 main components of our work: financial modeling, sourcing go-to-market offering opportunities, go-to-market concept for them to sell excess fixed asset
then identifying and ranking potential buyers, and helping socialize our work with the client to ensure smooth capacity.
adoption and transition of ownership during implementation.
Tasked with delivering on a very broad and multi-faceted scope on a tight timeline. I was specifically responsible for Retailer forecasted a lot of growth, but growth didn’t come and
S the following functional areas while managing their impact on other efforts of the team and client:
1. Develop overall financial model to assess multiple go-to-market solutions being developed and prioritize there was excess capacity especially in Supply chain,
investment in capabilities and sales efforts procurement and back of house.

Fit Interview
2. Develop specifically the inputs for the sourcing go-to-market offering, which entailed selling excess sourcing
capability and capacity in a marketplace format
3. Identify and rank list of potential buyers, ranging from smaller retail players to startups where we could I was responsible for identifying ways to fill this capacity.
exchange our capacity and capabilities for an equity stake in their businesses (because they are cash poor)
4. Help onboard new member of team in charge of IT workstream
1. Really broad scope My challenges included broad scope and limited client input as
O 2. limited client input and direction
3. limited audience mandate (limited number of clients were allowed to know about this) this was a relatively secret project not well publicized internally.
4. Limited data availability, limited internal expertise, new project area for project team and client
Identified and worked directly with internal experts (SMEs) to develop GTM (go-to-market) frameworks and To solve for this I took a 3-step approach:
A

Case Interview
playbooks for different functional areas. I owned the above pieces, so developed a deeper understanding of the
1. All products need a buyer start with who would buy different services,
sourcing and indirect procurement landscape where I had limited prior background knowledge, and this became
one of our leading service offerings. from startups to smaller retailers and brands
2. Define metrics for success how will we compare and sell our product?
I worked with their heads of merchandising, strategy, supply chain, and procurement to identify relevant 3. Define our fit with delivery - Where do we have the highest potential to
benchmarks, source comparable from the market, and develop playbooks and marketing materials. I also needed
sell?
to understand impact on current operations so that was part of my scope and presentation as well.
I worked shoulder to shoulder with the client to bring them along with this
process and ensure buy-in and smooth transition.
Developed go-to-market plan and timeline with complete client buy-in it’s now launched as redacted brands . The result was I presented a compelling thesis to build this offering complete
R My analysis supported the ultimate prioritization of services to launch and ultimately I continued to follow up with
with a tactical ‘stand up’ plan and full financials that the client later adopted.

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the client and our project teams after I was rolled to a new opportunity to ensure its ultimate success.

Major takeaways and learnings include that it is important to measure outcomes because only through that can Several of my learnings from this were:
L you see progress. It is important to get buy-in from the client and that involves iterative and ‘hands on’ work to
1. It’s exciting to see things I proposed come to life with the [insert
make sure that handoff is smooth and they are bought in. It is important to take a structured approach when facing
ambiguity with limited expertise or background in the subject area. interviewer firm] brand you have opportunities to do this constantly and
that’s really exciting
2. Have a clear and hypothesis-driven structure
3. Setting a way to measure outcomes is important
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Example of Fit interview prep approach

Overview
This is not necessarily the best or only way to prepare for the Fit interview, but it is one possible approach
For reference – this is meant only to demonstrate 1) a method of documenting and structuring your stories and 2) an example of the level of detail that
can be expected when telling stories (or shorter)

Interview Prep
Fit Interview
Case Interview
Resources
26
Example of Fit interview prep approach

Overview
This is not necessarily the best or only way to prepare for the Fit interview, but it is one possible approach
For reference – this is meant only to demonstrate 1) a method of documenting and structuring your stories and 2) an example of the level of detail that
can be cut from your story to fit the expected answer timeframe.
Question: Tell me about a time when you led a team through a challenge

Interview Prep
Full-Text Answer / Details Interview Response Text (1-2.5 minutes)
I’d like to tell you about the time when I had to pull of a media event within hours I’d like to tell you about the time when I had to pull off a media event within
H 24 hours.

One afternoon, a major client reached out and said they wanted to hold a media event the One afternoon, a major client reached out and said they wanted to hold a
S next day. media event the next day.
1. Time is limited normally it would take us at least 2 weeks to plan and execute a media It was a very tight timeline. On top of that, we had limited number of
O event consultants in the office and another major proposal due the same

Fit Interview
2. Half of the team was away on business trip, leaving me with only two new associates in afternoon.
the office
3. There is a big proposal due the same night
I broke the tasks down and divided the work based on the team’s capabilities: To solve for this I took a 3-step approach:
A I had more experience with media strategy and had more media relationships so I handled media contact and
1. I listed out all preparations needed to hold the media event and the
invitation / key message drafting
Colleague A is great with content and so he handled all the translations / speaker bio work, along with the proposal and divided up the work for the two coworkers and myself
logistics work 2. I communicated the need and process very calmly and clearly to my
Colleague B was to take over all proposal work instead of the two of us working on the proposal together coworkers
I communicated calmly with my coworkers regarding the situation and my ask

Case Interview
3. I coached the coworkers every step of the way to make sure we are on
I made sure to provide support to my coworkers every step of the way:
Colleague B was new to the team so she wasn’t confident about her abilities. I made sure to give her very track with quantity and quality
detailed instructions on how to write the proposal, what are the expectations, and why is it done in a certain
way.
I also told her I will be fully supporting her throughout the process and she will be able to finish the work with
flying colors.
When she came back with the first draft, I gave her tons of encouragements to boost her confidence and sense
of ownership, and gave her detailed mentorship again for revisions.
We were able to pull of the media event the next day. The client was very pleased with our We were able to pull off the media event very successfully within the time
R efficiency and high quality of work. The managing director was also very impressed and frame. Our coworkers and managing director were also very proud of their
boasted to the client that we are able to handle any requests. work and the team.

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Several of my learnings from this were: Several of my learnings from this were:
L 1. When faced with a big challenge, break the problem down 1. When faced with a big challenge, break the problem down
2. Model leadership in front of your co-workers if I complain they will complain; if I keep 2. Model leadership in front of your co-workers if I complain they will
calm they will be calm complain; if I keep calm they will be calm
3. Always be nice to people since you never know when you need them. 3. Always be nice to people since you never know when you need them

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Example of Fit interview prep approach

Overview
This is not necessarily the best or only way to prepare for the Fit interview, but it is one possible approach
For reference – this is meant only to demonstrate 1) a method of documenting and structuring your stories and 2) an example of the level of detail that
can be cut from your story to fit the expected answer timeframe.
Question: Tell me about your biggest achievement.

Interview Prep
Full-Text Answer / Details Interview Response Text (1-2.5 minutes)
I’d like to tell you about how I turned around our volunteer program from zero satisfaction I’d like to tell you about how I turned around our volunteer program from
H to high satisfaction. zero satisfaction to high satisfaction.

When I first started managing our non-profit organization, I was tasked to improve our When I first started managing our non-profit organization, I was tasked to
S summer volunteer program, which had received tons of complaints from the local teachers improve our summer volunteer program, which had received tons of
and volunteers. complaints from the local teachers and volunteers.

Fit Interview
This was a very complex and ambiguous task This was a very complex and ambiguous task
O I was fresh out of college with no industry experience or knowledge I was fresh out of college with no industry experience or knowledge

To solve for this I took a 3-step approach: To solve for this I took a 3-step approach:
A 1. I drew a framework for solving the problem, which was to first understand what went 1. Broke the problem down into a work process and clearly allocated
wrong and then to think about how to resolve. timelines
2. For identifying what went wrong, I traveled across China to speak to 100+ teachers and 2. Ramped up on program knowledge by speaking to 100+ teachers and
held conferences with past volunteers to get their feedback volunteers and living in rural China for a month to be immersed in the
3. Once the problems have been identified, I ramped up on industry knowledge by reading program setting

Case Interview
tons of books on non-profit management, reading promotion, reading program design, 3. Ramped up on industry knowledge by reading tons of books and consulting
etc. and speaking to industry experts so that I can have a sense of direction for where our industry experts
program is going, and also drew help from the non-profit community and recruited 4. Drew help from the nonprofit community so that each person can
subject-matter experts to handle the executions contribute their professional knowledge
The program next year was a huge success in that: The program next year truly satisfied the teachers needs and were very well
R 1. It satisfied the local teacher’s needs and was tailored to the volunteers’ preferences received by the local government. Some even asked to rollout our program
2. The program was also one of the most “scientific programs in the industry since it drew across their entire township.
from the best practices across the globe We also attracted loyal supporters to the program from the nonprofit
3. It had the support from many industry experts, who during the process fell in love with community since everyone felt a sense of ownership towards the program

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the program and decided to continue to help with the program I also became an expert and was asked to speak at other organization’s
events.
1. When faced with ambiguity, break down and structure the problem 1. When faced with ambiguity, break down and structure the problem
L 2. It takes time and hard work to be successful 2. It takes time and hard work to be successful
3. Always leverage the community will get a lot out of the process than expected! 3. Always leverage the community will get a lot out of the process than
expected!

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Example of Fit interview prep approach

Overview
Prompt: Tell me about your greatest accomplishment
As a 25-year-old, I came in to be interim-CFO of a struggling business facing bankruptcy. Looking back at the company when I left vs. when I arrived is my greatest
Headli

accomplishment.
ne

Interview Prep
Company was on verge of bankruptcy
Context

Took over interim-CFO duties as a 25-year old of a $70mm business with the need to help address.
First thing I did was observe, meet with all the different departments and understand what the issues with the company are.
From those discussions and analyses I understood the three major buckets I had to address were profit, culture, and lender relations

Actions

Fit Interview
Action 1: Diagnosis Action 2: Profit Action 3: Culture Action 3: Lender Relations
Met with different core functions of 1) Transition fill room from Los 1) Assisted CEO in recruiting new 1) Opened up transparent
the business to understand: Angeles to Tijuana, Mexico head of operations in Mexico, communications and monthly
How the business and industry 2) Increased fill rates (revenues) by CFO meetings
functioned; working with operations team 2) Cleaned up the financial 2) Developed weekly cash flow
Where the pain points were; to improve purchasing and statements – errors in the reports
and collected information to rationalize stock keeping units source files (had to go through

Case Interview
analyze and develop solutions. 2-3 years of data to clean and tie
(SKU)s.
to audited financials).
3) Created a ‘do it right first time
culture.

Company was able to perform much better, had a stronger management team to take over, and performance began to improve by the time I left. Had initial discussions about
Results

going to lender as pre-MBA intern.

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Learned how to be an operator, lead a team, the difficulty of not just developing a strategy but implementing it.
Takeaway

Most of the time things that you get assigned as someone who is young has a short deliverable – you get small deadlines,
s

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Example of Fit interview prep approach

Overview
This is not necessarily the best or only way to prepare for the Fit interview, but it is one possible approach
For reference – this is meant only to demonstrate 1) a method of documenting and structuring your stories and 2) an example of the level of detail that
your story should have to fit the expected answer timeframe.
Question: Tell me about a time you had to work with a difficult team member.

Interview Prep
Option 1 Option 2
H A veteran team member tended to be unproductive and shift
A new team member threatened to derail the project blame to others, and I helped improve his attitude and
productivity through inclusion
S I was leading a high-profile, large team project with multiple stakeholders to
Was product manager for a very important new software. Was
build the largest pedestrian bridge in the Seattle area. A new structural
newly assigned a team of 5 SEs and a UX designer.
reviewer was assigned to us midstream.

Fit Interview
O The new reviewer was belligerent and loud in meetings, took up lots of time A veteran SE was declining in productivity, late to meetings,
rehashing old decisions. The rest of the team was annoyed to insulted. didn't sit in team pod. Our team was disappointed/angry.
A Deflected him to preserve meeting time. Build trust. I made a point of going to where he was at and doing
work alongside him for half and hour every day.
Listened to his concerns,
Understand. Realized that he didn't have enough direction,
Acknowledged expertise,
needed more clarity, downward spiral.
Focused on how he could contribute,
Analyze. What could we do better to engage Chris? Would it help
Talked to his manager.

Case Interview
the team?
couldn’t fire him
Do. Invited the engineer to planning meetings to help give him
context. Had a Senior SE take ownership of ticket scopes to
Spent time talking to the rest of the project team to give him another chance
ensure they were understandable. Re-based with Chris
R The partner's attitude changed after these actions. Found a style to work
together. Understood he needed to be respected as an industry veteran.
Chris's productivity improved 2-3x to be in line with other SEs
Brought value to team - he uncovered critical cost savings through structural
design to the tune of $5M
1. Spending physical time close to your people will often help

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L
1. Clearly delineate scope to prevent overlap clarify what is the matter
2. However, provide context and understanding of WHY decisions were made 2. Importance of building trust
3. Praise in public, feedback in private. 3. Team members should understand why, and how their scope
piece fits into the whole. Enables them to make smart decisions

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Example of Fit interview prep approach

Overview
This is not necessarily the best or only way to prepare for the Fit interview, but it is one possible approach

Interview Prep
Fit Interview
Case Interview
Resources
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Example of Fit interview prep approach

Overview
This is not necessarily the best or only way to prepare for the Fit interview, but it is one possible approach
For reference – this is meant only to demonstrate 1) a method of documenting and structuring your stories and 2) an example of the level of detail that
can be cut from your story to fit the expected answer timeframe.
Question: Tell me about a time you led a team through a challenge.

Interview Prep
Full-Text Answer / Details Interview Response Text (1-2.5 minutes)
I’d like to tell you about a time my team was reaching a critical deadline for an I’d like to tell you about a time I helped my clinical trial team meet a critical FDA submission deadline.
H FDA submission that would make or break our clinical trial.

I was the youngest person on my team and had limited visibility and industry I had been working at Genentech for less than 6 months and was still relatively green. One day, I was
S knowledge assigned to assist a colleague on preparing her trial’s data for an Interim Analysis critical juncture in drug
I had heard of a trial that was in trouble due to oversight and assumed that I development).
would be brought in to provide minimal support on menial tasks
Study had an overwhelming amount of outstanding data that had not been The problem was that the study had gone on for 3 years and it had been discovered that almost 90% of the
O

Fit Interview
entered correctly, collected, or verified with the clinical sites data had not been thoroughly reviewed or cleaned. We had 3 months to remedy this while balancing new
We only had 3 months to correct the error mistrust on the team and collaboration across 3 continents.
My team no longer trusted my Data Management department and began to
micromanage and express frustration that strained the working relationship
The cross-functional team was spread across France, San Francisco, and
Australia, making it even more difficult to meet and collaborate
This was much more work that I anticipated/felt I was experienced enough
to handle
I replaced the legacy process of manually e-mailing updated Excel To solve for this, I did the following:
A

Case Interview
spreadsheets every day and created a drive housing all relevant documents 1. Identified and defined data with the team that would be most critical to the submission and prioritize
and updates their review
Reevaluate the process of cleaning data and communicate which data was 2. Designed and implemented a master tracker so that we could see the status of all individual data
most important to all relevant parties (Clinical Operations, Data points and patients and provide updates in real-time
Management, Safety/Clinical Science) 3. Initiated stand-up and stand-down meetings to foster transparent communication and align on goals
Mindfully scheduled meetings to not overwhelm calendars, but reinstate for the day
trust through transparent communication
Study was safe and submission approved by FDA We were able to clean all priority data and submit on time and place the study’s future out of jeopardy.
R Met the deadline Additionally, I shared my experience and lessons learned both with the original assigned Data Manager and
Talked with colleague and manager to understand how to mitigate against with leadership to explain how we could remedy intraorganizational trust in our group and empower
this scenario in the future individuals to accept responsibility, but find rapid solutions.

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I learned:
L 1. How to navigate ambiguity and to get up to speed quickly
2. The importance of ensuring fluid team dynamics with a shared goal/vision
3. How to pass on best practices to colleagues to empower them for future challenges

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The Case Interview
Trust in the preparation process, believe in yourself.

33
The Case Interview

Overview
How important is the Just like fit, the case portion of the interview can make or break your candidacy. It is
case? important to have a structured and disciplined approach to case practice, so that you can
put your best foot forward on interview day.

Interview Prep
The Case Progression The case interview typically begins with the interviewer describing a business situation
Overview and providing the candidate with some initial information. The amount of information
given up front will vary. Always make sure that you listen carefully, take notes and
identify and focus on the relevant case information. Make sure you understand what
questions you are trying to answer and ask clarifying questions about the information

Fit Interview
provided. Take some time (about a 60-90 seconds) to structure your analysis / develop
your framework. For the sake of courtesy, you should ask the interviewer for permission
to take this time.

After laying out your framework, walk the interviewer through your structure. You will
want to develop an initial hypothesis and seek additional information to verify or

Case Interview
disprove your hypothesis. This is considered ‘driving the case.’ You should continually
refer back to the structure you identified as you explore different aspects of the case.

Throughout the case you will want to ask yourself “so what?” as you uncover new
information and undergo analyses. You will want to evaluate the ways in which your
findings apply to the case problem. Your final recommendation will then be a synthesis of
what you have found through the exercise. You should end the case with a concise and

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actionable recommendation, including risks and next steps.

The general flow of a case can be seen on the following page.

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Skills tested in a case interview

Overview
Interviewer Engage with the candidate constructively

Present client Evaluate Provide specific Probe logic Evaluate

Interview Prep
problem framework and data when behind insights consistency &
Offer high-level approach asked Push thinking logic of case
overview of Decide on best Evaluate beyond what synthesis and
client’s path forward business has already recommen-
business for case judgment been said dation

Fit Interview
Problem Recommendati
Structuring Analysis Synthesis
Statement on

Case Interview
Ask clarifying Organize Make logical Combine Recommend
questions framework assumptions relevant data actionable
Verify case Use 80/20 rule Arrange and or analysis solutions
objectives Demonstrate interpret data Draw insights to Highlight risks
Establish scope appropriate Make leaps in answer “so and next steps
breadth and business what?

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depth intuition

Candidate Drive the problem forward

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Solving business problems – understanding the problem

Overview
Problem Recommendati
Structuring Analysis Synthesis

Interview Prep
Statement on

Clarifying questions:

Business model = ex. How does the company make money? Are we talking about one
B

Fit Interview
product or a mix of products? How is the company structured? Etc.
Geography = in what region / country / city does the company operate? The company
G
might be global, but the case may only consider one region.
Objective many case prompts may be purposefully obscure, such as “the company is
O

Case Interview
facing issues, what should they do . Always clarify the client’s obj. before moving on.

T Timeframe = do we have a timeframe for increasing revenues X% or for recovering an

investment? (ex. company has to breakeven in 3 years)

Before structuring your framework, you have to make sure you understand clearly:
1. The main objective of the case (i.e. profitability, revenue expansion, cost reduction, etc.).

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2. The information given to you (you may repeat your notes to check with interviewer if you
didn’t misunderstood any part).

36
Solving business problems – understanding the problem

Overview
Problem Recommendati
Structuring Analysis Synthesis

Interview Prep
Statement on

A framework is important, because it helps ensure that your response will be structured,
Why is the logical and thorough. Additionally, the interviewer will begin to draw conclusions about
framework your candidacy based on your ability to break down the problem, identify the most
important? relevant pieces of analysis to be conducted and your ability to approach the problem in a

Fit Interview
comprehensive way. A good framework will guide you throughout the case!

You should review and understand thoroughly the sample frameworks in the ‘Resources’
Developing section. In addition, to develop flexibility, a good way to practice is to pick out issues from
framework the newspaper and write out frameworks for them. Be sure to think in terms of buckets

Case Interview
skills and break them down to smaller details to work on your structure. Doing so will not only
help you quickly develop frameworks in a logical and structured way, but will give you
exposure to various industries.

Never use the popular frameworks directly and do not blindly memorize and apply
frameworks! Over-reliance on a specific framework can make a candidate appear robotic.
Applying Instead, you should customize the framework to the question you are being asked and be

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frameworks creative with your analysis. Based on the framework you have developed, you should be
able to identify several possible paths towards addressing the core issue. It is important to
prioritize the issues you will investigate in the case. The case interviewer may steer you in
a particular direction, so make sure to take cues from them on what is important.

37
Solving business problems – understanding the problem

Overview
Problem Recommendati
Structuring Analysis Synthesis

Interview Prep
Statement on

Based on the case information received and the framework you have developed, you should
formulate an initial hypothesis about the problem you are evaluating. A hypothesis is what you
believe to be the central issue of the case, or the solution to it.
Be hypothesis

Fit Interview
Throughout the case, step back occasionally to evaluate and adjust your hypotheses based on
driven new data. This ensures you are always maintaining sight of the big picture while collaborating
with the interviewer. It is more than OK to have an initial hypothesis, then discover through
analysis or data that you might be wrong, and then reformulate a new hypothesis.

Case Interview
Some interviewers will keep your notes to help them remember the path you took to complete
your analysis. Sketch out your thoughts on paper, use large handwriting, and tell the interviewer
what you are doing.

Keep quality Be as structured as possible when you are giving your thoughts on an issue or performing
calculations. In the analysis phase, you should ask questions, synthesize the information
notes provided, and draw conclusions based on the facts. This process helps you to test your

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hypothesis. It is a good practice to use a new sheet of paper for each phase of the analysis.
Imagine you are sketching out slides in a PowerPoint presentation that you will use to present to
the client. This will allow you to stay organized and visualize how the case has progressed

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Solving business problems – understanding the problem

Overview
Problem Recommendati
Structuring Analysis Synthesis

Interview Prep
Statement on

Before doing calculations, talk through your logic so that the interviewer understands your
Structure your
approach. Spend some time thinking about how to best arrange the data prior to jumping into
thinking calculations. It often helps to consider how you may translate the data in a spreadsheet

Fit Interview
If the data proves your hypothesis to be invalid, use your framework and proceed to the issue
with the next highest priority and develop a new hypothesis. Asking questions, collecting
information and developing and testing a hypothesis is an iterative process. Do not forget that it
“So what?” is important to verbalize your thought process throughout the interview. As you work through
more data, it is a good idea to verbally summarize where you are, what you have learned, what
information means in diagnosing the problem and where you are heading next

Case Interview
Do not panic! Candidates have successfully obtained offers despite making (sometimes several)
mistakes in calculations. The interviewer is not only assessing how you think, but also your
Math personality. If the interviewer helped you identify the mistake, say “Thanks” (don’t say Sorry!)
mistakes and move on with confidence and composure. It indicates that you’re someone who can
recognize your mistakes but not become petrified by them and allow them to impact your future
performance.

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Get out of your quant comfort zone during practice. Prioritize calculations in the same way you
Additional prioritize issues (i.e. Is this calculation relevant to the client / problem? Will it tell me needed
tips information to drive the case forward?) Keep a piece of paper folded (scratch paper) to use for
your math calculations.

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Solving business problems – understanding the problem

Overview
Problem Recommen-
Structuring Analysis Synthesis

Interview Prep
Statement dation

Always end your interviews with a succinct recommendation which provides the answer first. Do
not recap your path of analysis; instead, draw on key facts to give a clear answer to the central
questions of the case.
Finishing the

Fit Interview
Keep a list of key findings from each piece of analysis on top of the each paper (headline) used
case throughout the case. Depending on your interviewer’s style, you may have time -60 seconds)
to prepare a response or you may be asked to respond immediately. Be prepared to tie
everything you’ve done all the analysis, calculations, and discussions in your mind and articulate
the verdict in a concise and fluid manner.

Excellent syntheses usually include:

Case Interview
The A succinct, actionable recommendation that directly addresses the problem.
recommendation High level description of relevant analyses from the case.
Discussion topics for next steps and risks/points of attention.

As you go through the interview, remember that the interviewer is assessing whether they would
like to work with you. With that in mind, keeping the interviewer engaged and interested in you
Engaging with the and your thought process will be key to a successful interview.

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interviewer Keep a steady pace throughout.
Bring some personality into your analyses of problems.
Involve the interviewer in your thinking and calculations.

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End of Interview – Do you have something to ask me?

Overview
Quality wrap-up questions

Interview Prep
Once the case part is over, you will typically have a
few minutes to ask any questions you might have.
Students often make the mistake of under-preparing
for this section. Be sure to prepare by doing
thorough research about the firm beforehand,

Fit Interview
allowing you to ask insightful questions.
Examples of questions:
If possible, ask the firm for the interviewer name and
❑ Tell me a little bit about your research the person’s background on LinkedIn or on
background and your journey the company website in advance. Find points in
with firm X

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❑ What do you like the most common with your interviewer to explore in this
about firm X? section.
❑ Why did you decide to
specialize in Practice Y? The interviewer will use this to assess your
❑ I’m very interested in your candidacy and how much you want the job.
practice, can you tell me a
little bit more about it?
Remember that each interviewer does this several

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times a day use this as an opportunity to stand out!

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Additional Case Tips

Overview
Practice! Get comfortable and confident with a style that works for you across a variety of case types and
industries. Practice solving different problems while demonstrating your personality. Cases will always
require some level of creativity and conversation with the interviewer, so practicing how to engage well with

Interview Prep
another person during this process requires comfort and authenticity.

Give and solicit structured feedback during practice! Feel free to leverage the MCG interview feedback
template (found in the MCG Google Drive) or come up with something that fits your learning and feedback
style.

Fit Interview
Once you are in the interview room, prior networking or recruiting does not matter you must impress the
person sitting across from you.

Ask second-years to provide first-hand perspective on different case / firm styles during the interview
process. It will be helpful to know what differs among firms.

Case Interview
What was the biggest criticism reported to Career Services about Booth students last year? That people
underprepared for fit and case! Using canned frameworks, coming in with pre-drawn lines on your paper,
and doing too many cases can hinder students’ ability to think on the spot and be flexible. Don’t fall into this
trap! Remember that the case should be an actively engaging conversation.

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Remember that there is a lot of luck and randomness in the case process. Setbacks will occur, but staying
resilient is an important part of succeeding.

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Case Interview: How to structure your case

Overview
As a good practice, do every piece of analysis on a different piece of paper and write the main conclusion at
the top of the paper, as a headline, to help you organize your thoughts and to write the recommendation in a
few seconds!

Interview Prep
Framework Analysis - math

Should Company X expand in China? Market in China = 3B

Chinese Mkt Revenues Costs Tt mkt Potential Market = Total Market x %

Global - Price point x - Cost/unit
- Competitor structure 1MM units segment x % share captured x Price

Fit Interview
producer of - Target mkt volume expected - Fixed costs
4 big charged
CPG....
players...
Other Entry Options
Potential Market = 3B
- Cultural - Greenfield
- Regulation - Acquisition

Analysis - brainstorming Recommendation

Case Interview
Ways to improve revenue Enter Chinese market

1. Market of 3B
Product Channels Advertising
2. Breakeven of x years
- Reduce quality - Explore other - Advertise with 3. Opportunities to increase revenue
to increase sales channels local markets Risks Next Steps
penetration

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Competitor’s reaction Evaluate JV with current player

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Case Interview: How to communicate

Overview
What differentiates an average candidate from an outstanding candidate is also the way they communicate
with the interviewer, being able to draw insightful conclusions from the information given.

Interview Prep
Framework
In order to assess this expansion, I’d like to take a
Should Company X expand in China?
look at market structure, possible revenues and costs
Chinese Mkt Revenues Costs
we can obtain, our entry options and any other
Global
producer of
- Competitor structure
- Target mkt
- Price point x
volume expected
- Cost/unit
- Fixed costs
aspects, such as cultural fit.
CPG....

Fit Interview
Other Entry Options
- Cultural - Greenfield
- Regulation - Acquisition
China is a large market and it sure is attractive
looking from the outside. But I’d like to start my
analysis evaluating the Chinese market. The
Chinese market can be quite closed, and I imagine

Case Interview
we could have many local players. I want to see
how fragmented is this market and the
competitor’s positioning in terms of customer
segment and product quality in order to evaluate
how much share we would be able to capture.

✔
Then, I’d like to take a look at the profitability of

Resources
operating in China, ….

44
Common mistakes during the case

Overview
It’s all too common for candidates to remember -4 frameworks and apply them by rote memory to
any case.
Interviewers see upwards of 12 candidates per day, and a framework that is unique and tailored to
Framework is the client’s business problem can be a major differentiator .

Interview Prep
The interviewer can tell whether the candidate is thinking critically about the business problem or
too generic simply regurgitating a framework that was memorized in advance.
One simple way to tailor a framework is to make it industry-specific. For example, if the client is in the
oil exploration business, a cost category should be written as “pipelines rather than “transportation .
The candidate’s framework should be mutually exclusive and collectively exhaustive (MECE).
In other words, the categories on a framework should not overlap at all (e.g., you should not have
Framework is “competitors listed twice in two different places in your framework .
This mistake is too obvious and indicates that the candidate is disorganized and has messy logic.

Fit Interview
not MECE The candidate should include all potential issues that they think are relevant to solving the client’s
business problem.
If the candidate fails to ask clarifying questions at the beginning of the case, it prevents them from
Objective not narrowing the scope of the case and writing a more tailored framework.
Common questions include: “What are the client’s goals and objectives? “What is their business
clear model? “Where does our client operate? “What are the various steps in the manufacturing process?

Case Interview
“What benefit does the product provide?
This problem arises when the candidate asks for data and clarifying materials haphazardly rather than
systematically asking questions that relate to their initial hypothesis.
Unstructured For example, a weak candidate would ask, “Do we have any information on costs? while a strong
candidate would ask, “Given that our client is operating in the pharmaceuticals industry, I think fixed
request of data costs, and specifically R&D, could be major drivers of profitability. Do we have any information to
support this?”
The candidate should move systematically through each “branch” of their framework and not jump

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Jumping in a disorganized manner between areas of analysis (“buckets”).
Similarly, when doing a brainstorming exercise, the candidate should use organized buckets and try to
around fill one bucket with ideas before moving on to the subsequent bucket.

45
Different interview formats – candidate vs. interviewer led

Overview
Candidate-led cases (most common) Interviewer-led cases or “command-and-control”

Interview Prep
Example
Firms:

The majority of cases are candidate-led, where the case These cases generally follow a structured format, in
follows a generally unstructured format in which the which the interviewer leads the candidate through a
candidate drives the discussion. series of pre-prepared questions that showcase the

Fit Interview
The interviewer will often be reluctant to provide candidate’s ability to structure their thoughts, problem-
information up-front, and as a result, the responsibility solve, conduct quantitative analyses, brainstorm, and
falls on the candidate to quickly develop hypotheses synthesize findings into relevant conclusions.
and ask key questions throughout the case. As the interview is guided by the interviewer, the
Thus, it is essential for the candidate to have a candidate may be interrupted at various stages of the
comprehensive framework and to walk the interviewer case and be directed to the next portion of the

Case Interview
through the most relevant points in the framework. interview.
Furthermore, it is critical to pay attention to cues from This type of interaction is relatively common and should
the interviewer. For example, if the candidate asks not be seen as an indicator of poor performance.
questions about the client’s competitors and the Instead, it indicates that the interviewer has gathered
interviewer provides very little information, this likely the data point(s) they need on the candidate, and
indicates that competitors are not relevant to the case therefore can move forward to the subsequent section

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and therefore the next topic should be investigated. of the case. This format is primarily used by McKinsey
The candidate-led format is used by most firms, with and Deloitte in first and second round interviews.
the exception of McKinsey and Deloitte, in first round
interviews.

46
Different interview formats – written cases and group cases

Overview
Presentation/ written case Group cases

Interview Prep
Example
Firms:

Presentation cases generally occur in second-round Group cases generally occur in second-round interviews,
interviews, and are most common for Kearney, BCG, L.E.K., and are commonly given by Deloitte and EY.
and ZS Associates. In a group case, the candidate tackles a business problem
along-side 3 or 4 other candidates.

Fit Interview
The candidate is given a series of slides (generally between
In addition to evaluating a candidate’s raw structuring,
15-100) and a fixed time period (e.g., 30 minutes to 1 hour) problem-solving, and synthesizing abilities, group cases are
to review the slides, build a hypothesis and framework, designed to evaluate candidates’ interpersonal skills.
conduct analysis, identify the key takeaways, and prepare a In particular, this format is intended to show how
deck to be presented in front of a team of consultants. interviewees deal with disagreement between members of
During the presentation portion of the interview, the a team (a common occurrence on most consulting
consultants generally pose as clients and attempt to ask engagements) and diplomatically seek solutions.
Group cases also weed out candidates who are highly

Case Interview
difficult questions to assess the candidate’s ability to think
on her feet, remain calm and collected in front of an argumentative and unwilling to compromise or view a
situation from the perspective of another team member.
audience, and identify the “big picture story imbedded the The format demonstrates how a candidate deals with co-
charts and graphs. workers who have good ideas does the candidate try to
Often, the role of a post-MBA consultant is to take analysis take ownership over someone else’s idea? Do they try to
conducted by junior staff, identify the key story, and suggest argue that the idea is wrong simply because it’s not their
an action or additional lines of work based on this story. own? Are they building upon strong ideas and adding value
The presentation case is used to test your ability to process to the group discussion?
a substantial amount of information in a short period of Overall, while it may be tempting to view the other

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time (think: 80/20 rule), grasp the key takeaways, and candidates as competition, it’s best to genuinely view them
as your colleagues and teammates for solving the business
prepare a cohesive and logical presentation outlining these problem.
key takeaways while presenting comfortably and
confidently to a client.

47
Different interview formats – first vs. second round

Overview
In general, first round interviews will tend to be more case-driven, with less time devoted to fit.
The format will usually consist of 2 interviews with 5-10 minutes on fit followed by the case.

Interview Prep
With McKinsey, be prepared to spend 15-20 minutes on the fit portion. During the second round,
you will generally have 2-3 interviews with partners or other senior members of the firm, with
the structure ranging from a fit portion (5-15 minutes) upfront with each partner followed by a
First round case or an entire interview devoted to fit.
vs second
For the case portion, you will generally see more standard cases during the first round and more

Fit Interview
round complex or unstructured cases during the second round. Since first round interviews are usually
with managers or principals, they are typically more streamlined for cross-comparison. For
second round interviews, given that interviewers are mostly partners, they will tend to vary
significantly. Do not be surprised if you find yourself going from talking about your experience at
XYZ firm to analyzing the firm as though it’s a case. Be prepared for anything and remember to

Case Interview
keep up your energy and confidence.

Your interviewer may also use a stress interview to assess how you react under stress / pressure.
They may stress you through several ways, such as being rude, acting uninterested, disagreeing
with you, or firing several questions to you at once. The key to acing a stress interview is to stay
Stress
calm, maintain a good attitude, avoid getting defensive or angry, keep a sense of humor, and
interviews

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again, maintain a confident demeanor.

48
Useful tips for the day of the interview

Overview
Bring your own stack of white paper in a folder and your preferred pen to the interview. For on
campus interviews, recruiters usually won’t have spare office supplies in the room! Make sure
your pen shows up well on paper as legible to the interviewer.

Interview Prep
Don’t be afraid to use as many paper sheets as you need. Use each paper sheet for a different
analysis and write the main conclusion so what of the analysis as the headline. It’ll help you
organized your thoughts quickly when it comes the recommendation time.

We recommend you use a scratch paper for your math calculations on the side. Don’t make long

Fit Interview
divisions or multiplications in your main case paper or it’ll look messy. We recommend you fold a
paper in half and use it for calculations on the side. It’ll be easier to differentiate it from the case
solution.

In the day of the interview, some people find it useful to avoid checking emails or receiving calls.
The last thing you want is to go to an interview after receiving a negative answer from another

Case Interview
company. This can undermine your confidence during your next interview.

See your colleagues applying as your friends and as a useful resource and not as competitors. If
you feel talking to them after interview is good, do that. Many people find it really useful to have
a close group of friends who are going through the same process to share tips on preparation,
but mainly to support each other during this process.

Resources
Consulting companies usually don’t have a pre-defined number of spots to fill. They will make as
many offers as they can to all candidates who do well. Be confident in your skills and show your
best self in the interview day!

49
Additional Interview Prep
Resources

50
Resources: Overview of different sections

Overview
The following resources can be used to assist in your case prep. We recommend reviewing each section and
returning to these pages as your progress in your practice. The resources include:

Interview Prep
Illustrative frameworks as examples of what II. Additional case information
I. to analyze II. Supplemental structures / knowledge for
Sample case These examples are meant to be simple Additional brainstorming or developing frameworks in
frameworks you can use them as a base to build on casing info specific industries
P. 51 Adapt frameworks to the problem P. 57 Can be used in mid-case brainstorming as a
launching point

Tips, tricks, and shortcuts to use during Approaches to clearing common types of

Fit Interview
III. quantitative exercises IV. charts you will see during case interviews
Case math Purpose is to get you to the insights quicker Clearing
not to make you better at math charts
P. 64 List of useful info for market sizing P. 69

Quick deep dives into common industries Summarize the typical interview format and

Case Interview
V. used for cases VI. process for potential target consulting firms
Industry Idea is to make you think about revenue Firm briefs Demonstrate some of the structural
summaries and cost drivers, as well as key specific differences and similarities
P. 75 trends P. 84

Background on many common cities where Covers A/V, dress code, other
VII. Boothies in consulting land VIII. recommendations for virtual casing,

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Geographic Statistics on Boothie placement into Zoom Best behavioral interviewing, and general
Info / Brief consulting Practices guidance on networking/virtual interactions
P. 98 Covers both domestic and international P. 105

51
I. Sample case frameworks – Growth strategy

Overview
Case problem: Client would like help defining a near-term (3-5 year) growth strategy.
(Growth strategies typically refer to revenue growth, but can be clarified with interviewer)

Interview Prep
Market Analysis Growth Opportunities Key Considerations

Customers Existing Products For all strategies

Market size & growth Change Pricing: analyze elasticity proposed analyze:
Segments effects on volume Investment / entry cost
Drivers of demand Sales + Marketing to grow volume & breakeven period
Cannibalization

Fit Interview
Competition Grow market size / share
New products / business Competitive response
Market share
Long-term viability
Barriers to entry New markets / customers
Fit with current
Consolidation over time Others portfolio
Differentiation Product Mix
Ways to grow
Recent trends

Case Interview
Customer Segments
Organic through R&D
Technological advances Distribution channels and investment LT
Regulatory changes Service quality focus
Infrastructure for growth Inorganic through
R&D acquisition ST Focus
Sales team

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Marketing

Note: This framework is illustrative. It represents what could be written down in 60-90 seconds to structure
candidate’s thinking. Other illustrative frameworks will be provided in MCG Public Toolkit.

52
I. Sample case frameworks – New market entry

Overview
Case problem: Should a banana producer start selling coconuts?
(Clarify objectives with interviewer – Are we entering for revenue growth, profitability, market share etc.?)

Interview Prep
Coconut Market Product Fit Entry Profitability Others

Market size / growth Capabilities Revenues Finances do

Key Market Drivers producing Pricing decision we have
Customers coconuts vs. Expected volume money?
Largest segments bananas Synergies to sell Strategic
Sourcing

Fit Interview
Preferred channels Product mix moves for
Preferences for coconut Processing What kind / type of entry are we
consumption, i.e. juice, Distribution coconuts? acquiring
whole, etc. Labor Cannibalization existing
Competition Brand fit Costs coconut
# of competitors and Initial investment producers?

Case Interview
market share Ongoing fixed costs
concentrated vs Ongoing variable costs
fragmented
Opportunity costs
Barriers to entry
Breakeven time period /
Competitive response
ROI target?

Resources
Note: This framework is illustrative. It represents what could be written down in 60-90 seconds to structure
candidate’s thinking. Other illustrative frameworks will be provided in MCG Public Toolkit.

53
I. Sample case frameworks – Profitability

Overview
Case problem: Despite strong historical performance, margins have been declining

Market Profitability

Interview Prep
Market size
Competition Revenues (Industry Specific) Costs (Industry Specific)
Current share
Prices ? Fixed costs
New entrants
Volume ? Capacity

Fit Interview
Source of competitive
Product mix Rent / depreciation
advantage
Examine shifts in volume Insurance
Adjacent markets
(substitutes, Different pricing decision Cost centers
complements) R&D
By channel / geography
New consumer trends Marketing
Contribution from different

Case Interview
being observed segments Variable costs
Regulatory changes Materials
By customers
impacting industry Labor
Customer segments
Macroeconomic Overhead
Shifting customer needs?
conditions Benchmark and adopt best
practices

Resources
Note: This framework is illustrative. It represents what could be written down in 60-90 seconds to structure
candidate’s thinking. Other illustrative frameworks will be provided in MCG Public Toolkit.

54
I. Sample case frameworks – Acquisition

Overview
Case problem: Should a private equity (PE) client acquire a company?

Market Target Company Acquirer / Client Risks

Interview Prep
Size of market & growth Capabilities / sources of Investment If deal is
Trends competitive advantage strategy strategic in
Customers Customer loyalty Portfolio size nature
Segments Patents Hurdle rate Cultural fit
Distribution network / Competitive
Buying behavior Opportunity

Fit Interview
relationships response
Channels cost
Quality
Competition Expertise in
Brand equity
Market share industry
Management team
Barriers to entry What
Operational
How do players constitutes

Case Interview
improvement
compete success?
(price/service/etc.)? Deal economics
Is company profitable?
NPV vs deal price
Exit opportunities
Due diligence

Resources
Note: This framework is illustrative. It represents what could be written down in 60-90 seconds to structure
candidate’s thinking. Other illustrative frameworks will be provided in MCG Public Toolkit.

55
I. Sample case frameworks – Reduce costs

Overview
Case problem: What should a conglomerate looking to reduce costs do?

Current Processes Assess Costs Reduce Costs Risks

Interview Prep
Value chain Analyze existing Internal Drop in
Most and processes Labor: cheaper sources, quality
lease critical Identify outliers / trends increased efficiency Workforce
processes Benchmark Economies of scale morale
Any Rent vs own Keep best
Competition

Fit Interview
organization / In house vs outsource people /
Across business units
industry Past performance External practices
changes Supplier power Suppliers
Distributors
Source cheaper

Case Interview
Discounts

Resources
Note: This framework is illustrative. It represents what could be written down in 60-90 seconds to structure
candidate’s thinking. Other illustrative frameworks will be provided in MCG Public Toolkit.

56
II. Sample brainstorming questions and frameworks

Overview
Common brainstorming
Common brainstormingquestions
questions Important considerations
Important considerationswhile brainstorming
while brainstorming
How do you grow revenue?
Always be structured and write down the

Interview Prep
Existing products
New products brainstorming rambling hurts you!
How do you reduce costs? Sample frameworks: Use 2-3 buckets while brainstorming make sure
2X2 $ Investment required and time to implement the buckets are MECE
Value chain analysis Don’t merely list down the points
What are the source of synergies in this Try to have 2-3 points under each bucket
acquisition?
Be creative don’t use canned memorized points

Fit Interview
Revenue synergies
Cost synergies while brainstorming
How would you price the product? Be case specific
What are the factors affecting the price of the
product / service?
Where do you find information about a product /
service / industry etc.?

Case Interview
Surveys
Experts
Market research
Pros and cons of an acquisition / strategic
partnership
Pros and cons of diversification
Pros and cons of outsourcing

Resources
What do you need to analyze a particular
investment decision?
Considerations for launching new technologies
Commodity vs specialized products

57
II. Supplemental case information – industry analysis

Overview
Factors to
Factors toconsider
considerin in
anan
industry analysis
Industry Analysis
Relevant industry conditions

Interview Prep
Size (in volume and USD)
Profitability
Growth (historical and trends)
Segments (high vs low end)
Regulation
Technological advances
Barriers to entry / exit (also see Growth Strategy page)

Fit Interview
Fixed costs component / economies of scale
Learning curve
Access to distribution channels
Access to suppliers
Regulation of assets (i.e. utilities)
Key drivers for success
Consumer insight-> where is the value for consumers?

Case Interview
Technological advances
Brand equity
Current substitutes
New technologies and consumer trends usually create new
Industry structure (usually one of the following) substitutes
Perfectly competitive (price = marginal cost) -> easier Current trends
to entry and capture market share Cost drivers (outsourcing, new competitors, etc.)
Product trends

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Oligopoly -> more difficult to entry, may pace price war Value chain
Monopoly (price > marginal cost) Vertical chain of productions including suppliers and distributors
Important to assess key players and their respective Is the industry vertically integrated?
market-share

58
II. Supplemental case information – profitability analysis

Overview
Factors totoconsider
Factors considerin ain
profitability analysis
Profitability Analysis

Interview Prep
Profit = Revenues - Costs

Revenues = Price * Volume Costs = Variable Costs + Fixed Costs

Factors affecting prices Variable costs (must vary with each unit sold)
Elasticity of demand Materials
Product mix Fuel

Fit Interview
Differentiation Fixed costs (do not vary with each unit sold)
Customer segment (low end vs high end) Labor (can be semi-variable)
Factors affecting volume Property, plant and equipment
Internal Operating costs: distribution, marketing, R&D, SG&A
Distribution logistics, supply chain Other cost considerations

Case Interview
Inventory management Sunk cost bias
Capacity Capacity utilization and impact on total cost per unit
External Benchmark costs with key competitors
Competition Relative percentage of cost components
Customer trends Cost allocation across multiple products
Substitutes / complements Total costs, average variable costs (economies and

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Market trends (declining market, regulation, etc.) diseconomies of scale)
Variations in costs over a period of time
Inventory holding costs

59
II. Supplemental case information – growth strategy

Overview
Factors to
Factors toconsider
considerin in
a growth
Growthstrategy caseAnalysis
Strategy
Mapping growth strategy options: Factors to consider for new market / new product

Interview Prep
Industry structure and analysis (see above)
Existing New Market
Market Localization of product / service offerings, regulations,
tariffs
Existing Increased New Market Source of volume (steal share, create new market)
Products Penetration Entry
Customer related barriers to entry
New Product Diversification Switching costs

Fit Interview
Products Development Access to distribution channels
Brand awareness
Non-customer related barriers to entry
Increased penetration
Capital requirements
Capacity to sustain increased volume (see Capacity Regulation
Expansion below) Economies of scale

Case Interview
Increased marketing expense Quantify investment cost and risk
Prior experience with market / product entry have
Methods of market entry or product entry they tried this before? If so, what was the outcome?
Organic / greenfield
Acquisition Additional factors for new product entry
Partnership / joint venture Cannibalization

Resources
Trading up, trading down

60
II. Supplemental case information – Marketing

Overview
Framework for Strategic Marketing
1 2

Interview Prep
Three ‘C’ Analysis
Strategic Product Differentiation, OR
Strategic Customer
Cost Leadership, OR
analysis Company objectives Focus Strategy
Competition

Fit Interview
Marketing Target market / positioning Market Target Market
Positioning
objectives Demand Strategy Segmentation Selection

4 4 P analysis i.e. Marketing mix

Case Interview
Product
Marketing
Price
tactics Place (channels)
Promotion

Resources
Measuring Customer acquisition Customer retention Share of wallet
outcomes (Get) (Keep) (Sell more)

61
II. Supplemental case information – acquisition

Overview
Factors to
Factors toconsider
considerin in
a private equity/acquisition
a Private case Case
Equity / Acquisition
Determine the rationale

Interview Prep
Revenue increase and / or cost reduction?

Acquire resources
Capacity
Technology

Fit Interview
Distribution
Human capital
Brand
Product line
Network effects
Complementarities

Case Interview
Cost synergies
Economies of scale
Economies of scope
Learning curve

Resources
62
II. Supplemental case information – investment, capacity

Overview
expansion, pricing strategy
FactorsBusiness
New to consider for investment in new business
Investment Factors to
Pricing consider for pricing strategy
Strategy
Industry analysis
Elasticity of demand

Interview Prep
Rationale
Financial assessment and break even point Substitutes
NPV: initial investment, ongoing costs, projected cash flows, Short run outcomes
cost of capital, sensitivity analysis / risks Long run effects
Property, plant and equipment Economic value analysis
Useful life of equipment Reference value
Depreciation Differentiation value

Fit Interview
Utilization Cost-plus method
Salvage value Non-linear pricing
Opportunity costs / economic rent
Option value Two-part tariffs
Bundling: complements, non-complements
Capacity Expansion
Factors to consider for capacity expansion

Case Interview
Rational for expansion (e.g. capacity utilization, demand increase)
Impact on prices increasing supply may affect demand
Competitive reaction
Options
Expand existing facility
Build new facility
Proximity to suppliers / distributors and transportation

Resources
requirements
Time to build
Seek alternatives lease, outsource, acquire, etc.

63
III. Case math – general guidelines

Overview
Case math provides an opportunity for firms to test This is a great way to more quickly get to
candidates’ ability to perform calculations quickly and the 80/20 solution. Be sure to ask your
Rounding
accurately, as well as their general “number sense or interviewer to see if it’s okay to round

Interview Prep
understanding of how to extract meaningful insights first.
from a large quantity of information.
Performing long division to get the right
Talk This helps the interviewer understand answer is much better than trying to do
Be accurate
through your thought process and keeps the the math mentally and then get it
interviewer engaged, avoiding awkward wrong!

Fit Interview
your
process and silences. This also can help if you make a
calculations mistake as your interviewer can easily Don’t get Many people have messed up on
step in to correct you. flustered if calculations and still receive job offers
you make a because they kept their cool, corrected
mistake their errors, and moved forward.

Case Interview
There are What separates the good from the great
usually response is: (i) elegance of the solution, Use the While people most often use white .
many right (ii) articulation of the math / logic, and paper you x paper, try graphing or engineering
ways to get (iii) synthesis of the key takeaway, or feel paper if you think it would help you stay
to the right “so what? that comes from the result. comfortable organized with your case math or other
answer with areas of the case.

Resources
Basic math principles and equations which are often useful for case interviews are provided on the
following pages.

64
III. Case math – tips and tricks

Overview
Rounding
Rounding Distributive property
Distributive Property
Example 1: Example 1:

Interview Prep
23 * 51
223 million * 21 = (20 * 50) + (3 * 50) + 23
M = 1,000 + 150 + 23
= 4,400M or 4.4 billion
Example 2:
Example 2: 3,756 / 33
= (3,300 / 33) + (456 / 33)
1,030,850 / 33 million

Fit Interview
= 100 + (330 / 33) + (126 / 33)

= 114 (or 120)

Scientific notation
Scientific Notationto avoid miscounting zeros Rule of
Rule of 72
72
The Rule of 72 allows you to calculate the growth rate an

Case Interview
Multiplication Example:
2,000 * 300 investment will require to double in a specific number of
years. Conversely, it can be used to calculate the number of
= (2 * 103) * (3 * 102) years it will take an investment to double in value at a given
= 6 * 105 growth rate.
= 600,000
Example 1:
Division Example: For an investment to double in 5 years, it must grow at:
100,000,000 / 5,000 (72 / 5) = 14.4%

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= (10 * 107) / (5 * 103)
= 2 * 104 Example 2:
An investment growing at 12% will double in:
= 20,000 (72 / 12) = 6 years

65
III. Case math – business formulae (1/2)

Overview
Contribution Margin reveals how much of the
company’s revenues contribute to the company’s fixed
costs and income

Interview Prep
Breakeven quantity indicates how many units of product
need to be sold to cover the fixed costs
Time to breakeven indicates how many periods will be
necessary to reach the breakeven quantity

Usually, elasticity indicates how many more items

Fit Interview
(volume) we can sell with a decrease of 1% in price
Revenue growth considers the increase in revenues due
to increase in price and increase in volume
CAPM stands for Capital Asset Pricing Model and is used
for pricing of financial markets securities

Case Interview
Present value is the value of future cash flows (positive
or negative) brought to present value
Perpetuity calculation is the value of all future cash
flows until perpetuity brought to present value; is
usually used to calculate the value of firm or investment
NPV stands for net present value and is the value of all

Resources
future cash flows brought to present value by the
interest rate minus the initial investment

66
III. Case math – business formulae (2/2)

Overview
CAGR stands for Compound Annual Growth rate
and indicates the average annual growth per years
in a given period of time

Interview Prep
Return on assets measures how profitable the
company is relative to its assets and gives an idea of
how effective management is on using company’s
assets to generate earnings

Return on equity measures how much money a

Fit Interview
company has provided relative to the money the
shareholders have invested

Return on investment measures the efficiency of an

investment or is used to compare several possible
investments

Case Interview
Gross margin indicates how much money the
company makes before sales, marketing and
general expenses; this amount divided by the
overall revenue of a company is the gross margin %

Resources
Operating margin indicates how much money the
company makes before taxes

67
III. Case math – factoids and fractions

Overview
Case factoids
Factoids Equivalent fractions
Equivalent fractions
In some instances you will be expected to estimate a It can help to have the following fractions memorized:

Interview Prep
market size. It can be useful to know approximate data 1/2 = 50%
so your estimations are accurate. You may want to 1/3 = 33%
research these types of facts for your office location. 1/4 = 25%
1/5 = 20%
Population Data:
U.S. Population
1/6 = 16.7%
1/7 = 14%

Fit Interview
320 million
Population of New York City 1/8 = 12.5%
8 million 1/9 = 11%
Population of Los Angeles 4 million
1/10 = 10%
Population of Chicago
3 million
Population of Houston 2 million
Other math resources

Case Interview
Population of Philadelphia
1.5 million Flash cards or times tests online
U.S. Households
GMAT prep books!
114 million CQ Interactive (membership required):
Average lifespan http://www.cqinteractive.com/cqi_main.cfm
80 years iPhone or other mobile apps: (i.e. Fractionator,
Evenly distributed per age 4 million

Resources
Fraction Factory, Brain Tuner Lite (free), and
Population of China ArithmeTick)
1.3 billion
Population of India
1.24 billion
Global Population
68
7.0 billion
IV. Clearing charts – “Marimekko” or “Mekko”

Overview
The “Mekko is a common chart form,
especially at Bain and BCG.

Interview Prep
External to chart:
Check chart title, headers, and footers
Read axes and units carefully

Internal to chart:

Fit Interview
Pay attention to segment sizes / overall
total
Box sizes within each segment typically
show absolute market share within that
segment
Totals for each company can be computed

Case Interview
by multiplying height (percentage in this
example) * width (segment size in this
example)
Check across segments for trends or
missing companies Synthesis:
Check for an “Other box which combines Finish with a clear “so what from the chart and
the remaining companies’ share into a

Resources
attempt to link to other information or charts provided
single box. A large “Other box typically to find second-level insights
indicates a fragmented market.

69
IV. Clearing charts – “Marimekko” or “Mekko”

Overview
Key takeaways from this chart

Market segmentation:

Interview Prep
Notice that the $160B market is divided into
four segments. The width of the segment on
the top of each bar indicates the size of that
segment. For instance, segment 1 is $50B
and segment 3 is $35B.

Fit Interview
Competitive landscape:
We can observe the level of competition and
relative positioning of each player. For
instance, segment 1 is dominated by our
client and is consolidated, while segment 3 is

Case Interview
very fragmented. Additionally, Competitor 3
does not have a presence in segment 3 or 4,
and Competitor 2 is not in Segment 2.

Share of segment:
Within each segment, we can also find the size of segment captured by the various players by looking at their
height within the bar. For instance, segment 1 generates $50B of revenues and our client has 50% share i.e.

Resources
50% of $50B = $25B. Similarly, segment 2 generates $25B of revenues and competitor 3 appears to have 10%
share i.e. 10% of 25 = $2.5B.

70
IV. Clearing charts – “Waterfall”

Overview
The Waterfall is a very common
graph and used by most consulting

Interview Prep
companies.

External to chart:
Check chart title, headers, and footers
Read axes and units carefully

Fit Interview
Internal to chart:
Orient yourself to what is being built-
up (or built-down)
Pay attention to each bar’s size value
relative to total size / value

Case Interview
If axis is a total (not %), can calculate
individual components in % of total
If axis is % (with known total), can
calculate individual components in #
Pay attention to each label and how it
Synthesis:
ties back to the case Finish with a clear “so what from the chart

Resources
Attempt to link to other information or charts provided
to find second-level insights

71
IV. Clearing charts – “Stacked Bars”

Overview
Chart clearing
Stacked barsguidance
are also widely used
among consulting companies and
You should clear option
are a good stackedto
bar charts by
a regular

Interview Prep
looking at thestandard
following:
table.
External to chart:
Check chart title, headers, and footers
Read axes and units carefully

Fit Interview
Internal to chart:
Absolute axes can show volume
changes over time (See Exhibit 1 left
hand side)
If only absolute, can check for mix

Case Interview
shift using segment / total
% axes can show mix shift over time
(See Exhibit 2 right hand side)
If only %, can check for absolute
growth using totals ’s Synthesis:
Pay attention to each label and Finish with a clear “so what from the chart
segment and how it ties back to the

Resources
Attempt to link to other information or charts provided to find
case second-level insights

72
IV. Clearing charts – “Bubble Chart”

Overview
Bubble charts can be somewhat
confusing make sure you ask

Interview Prep
questions if it is not clear.

External to chart:
Check chart title, headers, and footers
Read axes and units carefully

Fit Interview
Check legend typically bubble size is
meaningful

Internal to chart:
Understand the meaning of the axis,
positioning, size of each bubble

Case Interview
Pay attention to each label and how it
ties back to the case
Make sure to understand trend lines and
“normative bands as they vary from
Synthesis:
firm to firm
Finish with a clear “so what from the chart
Look for outliers in any of the three
Attempt to link to other information or charts provided to find
dimensions (x, y, bubble size)

Resources
second-level insights

73
IV. Clearing charts – “Clustered Chart”

Overview
A clustered chart groups
information together to allow for

Interview Prep
easy comparison.

External to chart:
Check chart title, headers, and footers
Read axes and units carefully

Fit Interview
Internal to chart:
Pay attention to each bar / trend and
how it ties back to case
Compare bars to each other to
understand trend and tie back to case
Check totals of each bar and understand

Case Interview
implications on case
Identify inflection points where trends
change significantly
Pay attention to CAGR calculation start
and end points, and identify trends Synthesis:
before and after those points which do Finish with a clear “so what from the chart
not follow

Resources
Attempt to link to other information or charts provided to find
second-level insights

74
V. Industry Summary - Airlines

Overview
Summary of Business Airlines provide transport services for individuals and commercial freight
Model/Service Typically provide different tiers of service dependent on price point

Interview Prep
E.g. Business Class for individuals, same day delivery for air freight

Low cost carriers (LCC) recent emergence based on the Southwest Airlines model,
Market/Industry competition based mostly on price and ‘no frills’ service
Consolidation lots of M&A, alliances between US and European airlines
Competitive market easy to compare prices, airlines use dynamic pricing for most routes

Fit Interview
Individual customers leisure or vacation travelers
Customers Corporate customers business
Travel websites, 3rd party vendors

Telephone international call centers

Distribution

Case Interview
Online direct with airline, 3rd party websites, discount travel operators
Channels Direct at airports, physical airline agents

A few established domestic carriers in the US, mainly compete over price. All have a local
Competition base of strength where profitability on certain routes is higher.
Some domestic airlines fly international and vice versa, international destinations used to
attract customers

Resources
Revenues = tickets sales, baggage fees and services, food and beverage sales, credit card fee
Profitability Costs = FC > plane purchases / leases, some employees, gate slots, airport royalties, VC >
Overview fuel, hourly employees, food and beverages

75
V. Industry Summary – Consumer Packaged Goods (CPG)

Overview
Summary of Business
CPG companies manufacture and market a wide variety of goods and household products
Model/Service

Interview Prep
Broadly grouped into food and beverage, toiletries and cosmetics, small appliances

Covers very large part of developed country GDP, success based around successful branding
Market/Industry and marketing of products create different segments and unique selling points
To maintain profits more CPG companies are forming alliances to build market growth
Investment in R&D and new technology is a recent trend, better experience for consumer

Fit Interview
Individual customers
Customers Wholesalers (Costco)
Large Retailers (Walmart or Target)
Convenience Retailers (CVS, Walgreens and 7/11)

Retail
Distribution

Case Interview
Wholesalers
Channels Online and direct

Majority of brands and product owned by small number of global conglomerates with
Competition subsidiaries
Proctor and Gamble, Unilever, Kellogg’s, Frito Lay, Coca-Cola, Pepsi, L’Oreal, Colgate-
Palmolive

Resources
Revenues = volume of goods sold, premium pricing often, product portfolio mix
Profitability Costs = FC > marketing budget, R&D, salaried employees
Overview VC > cost of manufacturing each unit (COGS), labor, transportation

76
V. Industry Summary – Energy / Utilities

Overview
Energy companies traditionally are vertically consolidated and are involved from extraction
Summary of Business of oil to refining, distribution and shipping
Model/Service Products include oil, gas, coal, biodiesel, nuclear and renewable most revenue comes from

Interview Prep
the generation and distribution of resulting electricity
Utility companies heavily regulated or owned by federal / state govt., vital to economy

Many countries trying to reduce their dependence on traditional fossil fuels like oil and gas
Market/Industry Environmental and sustainable energy sources of key concern to most companies, many
governments defined long-term alternative energy goals
OPEC retains control of oil market, traditional fossil fuels still account for majority of energy

Fit Interview
Governments, corporates and individuals
Customers Residential consumers typically pay more given the high infrastructure costs required to
distribute
Governments and corporates often purchase in bulk ahead of time to hedge at lower costs

Retail and wholesale depending on customer

Distribution

Case Interview
Telephone
Channels Online recent trend showing greater interaction with customers online

History of M A and consolidation in ’s and ’s, ExxonMobil, Royal Dutch Shell, BP

Competition Utilities competition somewhat limited, high barriers to entry, low but stable profits,
regulated monopolies

Resources
Revenues = demand for electricity from population growth, higher wealth levels globally
Profitability Costs = FC > high investment in infrastructure to generate and maintain, power plants, labor
Overview and distribution networks

77
V. Industry Summary – Financial Services

Overview
Summary of Business Includes commercial, retail and investments banking, also types of asset management
Model/Service Retail and commercial banks provide deposit, credit cards, loans and payment services

Interview Prep
Investment banking tends to be institutional advisory, corporate transactions and financing

Repeal of Glass-Steagall Act in 1999 has seen the consolidation of many large global banks
Market/Industry Recession of ‘ ’ brought many more mergers and alliances, high levels of regulation
from government, lower profitability levels enjoyed by most banks as a result, some riskier
banking activities now curtailed and restricted

Fit Interview
Individuals normally require retail banking services vs corporations and governments that
Customers will utilize commercial and investment banking. Financial products for institutions far more
complicated than retail.

Many individuals now bank online, use of live chats becoming prevalent
Distribution

Case Interview
Face to face still popular and increased use of ATM’s to carry out more services
Channels Corporates more often than not have ongoing and active relationship
Banks will often use credit cards and other credit services to deepen relationships

Bulge bracket include large, global and universal banks like JPM, Citigroup and BAML,
Competition specialized investment banks include Goldman Sachs and Morgan Stanley although many
provide similar services
Boutique banks tend to be smaller, more regional, offer more specialized sector services

Resources
Revenues = net spread between interest rate on loans and deposits, fees from advisory
Profitability Costs = overheads would include cost of branches and online platforms, insurance, security,
Overview discretionary remuneration for some parts of the bank

78
V. Industry Summary – Manufacturing

Overview
Summary of Business Sector includes any company that has mechanical, chemical or technological processes to turn
Model/Service raw material into a different finished product

Interview Prep
Includes aerospace, automobile, chemicals, electronics, industrial, medical and biotech

Traditionally large part of US economy, size has waned in recent years as services has grown
Market/Industry Higher cost structure in the US compared with some developing countries
Cyclical with the strength of economy, stalwart conglomerates still backbone of industry
Outsourcing, lean production and six sigma key industry concepts to minimize waste / cost

Fit Interview
Automotive: individuals or company use; Metals: aerospace, automotive, heavy machinery
Customers manufacturing; Plastics: medical industry, consumer packaged goods; Infrastructure:
governments / utilities

Retail any industry where individual is the end consumer (apparel, automotive, electronics)
Distribution

Case Interview
Wholesale where end consumer is another company (chemical, pharmaceutical,
Channels semiconductor, heavy machinery manufacture, infrastructure)

GM, Ford, Toyota, VW, BMW

Competition Boeing, Airbus
GE, Samsung, Sony, Phillips

Resources
Revenues = variety of underlying consumers (volume high or low), move to emerging markets
Profitability Costs = labor and machinery for transformation (possible outsourcing), quality control,
Overview inventory management, storage and primary raw material

79
V. Industry Summary – Media & Entertainment

Overview
Includes everything from print to audio, movies, video games and online
Summary of Business Subsectors have a great deal of overlap but exist mainly to inform (online news, print
Model/Service newspapers), entertain (movies and online sites like YouTube) and interact (Facebook,

Interview Prep
LinkedIn, Yelp)

Trend to digitization and the internet negative for traditional print and media companies,
Market/Industry required large investment to online
Google still dominating search but high competition for ‘clicks’ and online attention, new
competition for online services and social media

Fit Interview
End users or individuals seen as customer but also have become part of the product. Ratings
Customers on websites like Yelp and reviews on Amazon are used my media companies to sell
advertising.
Advertising companies are target market for most media companies.

Print traditional newspapers, magazines, posters (but now all with online / mobile
Distribution

Case Interview
substitutes)
Channels Television: cable, streamed via the internet, online content only (Netflix), mobile options
Online news channels, social media website, blogs, networking platforms

Traditional media conglomerates like Comcast, Fox, Time Warner, BSB

Competition New tech and search firms like Google, Apple, Facebook also competing for online attention
and advertising revenue to create new online platforms

Resources
Revenue = advertising, subscriptions, fees for exclusive content and traffic to other websites
Profitability Costs = infrastructure for website design and maintenance, cloud storage, app development,
Overview FC > overhead for studios, marketing budgets, royalties for content / actors / performers

80
V. Industry Summary – Pharmaceuticals

Overview
Summary of Business Research, develop and sell drugs / vaccines / medicines for the cure and prevention of human
disease
Model/Service

Interview Prep
Initially protected by patents, then generically produced by ‘copy cats’
Generics gifted formula and only need clinical trials, R&D already been done

Profitable industry, $BN spent on R&D then recouped through patents and successful
Market/Industry adoption by consumers
Significant consolidation in recent years, large firms need to split high costs, pricing a key
component of pharma who will pay the cost of drug development?

Fit Interview
Doctors and medical practitioners who prescribe drugs to patients
Customers Insurance companies who pay for a majority of the cost
End patients and consumers

Retailers can sell over the counter (OTC) products and prescriptions Walgreens, CVS
Distribution

Case Interview
Prescription drugs dispensed at licensed pharmacies and hospitals
Channels Large distributors / intermediaries sell to end consumers also

Diversified companies include Johnson & Johnson, Wyeth, non-diversified include Merck
Competition Success of these companies comes down to how successful products are, how many people
adopt them, what are side effects and cost of alternatives
US / Europe / Japan are currently biggest markets move to dev. markets more prevalent

Resources
Revenue = size of potential customers, efficacy of the drug in terms of premium, length and
Profitability strength of patent obtained, competitor or substitute products currently available
Overview Costs = R&D, threat of generic rivals, sales and marketing to doctors and hospitals

81
V. Industry Summary – Private Equity

Overview
Summary of Business Purchase and investment in firms that are not publicly traded. Private investors provide
financing and cash to target companies, normally in exchange for an element of operational
Model/Service

Interview Prep
financial control.
Forms include Leveraged Buyouts (LBO), Venture Capital (VC), Mezzanine and distressed debt

Highly cyclical, success dependent partly on strength of the economy and availability of credit
Market/Industry Pure play PE shops now venturing into other forms of alternative investment like credit and
hedge funds
Current talk about ‘dry powder’ or excess cash competing for deals, tends to elevate prices

Fit Interview
Investors (Limited Partners) in PE firms can be wealthy individuals, pension and insurance
Customers funds, asset managers, governments, sovereign wealth funds and other institutional investors

LBO borrow debt and invest equity to control a company, typically exit after 5 years
Distribution

Case Interview
VC earlier stage, give cash in exchange for equity, more actively involved with investment
Channels Mezzanine shorter term higher yield debt and financing containing equity-like options
Source direct to larger institutional investors, indirectly via banks and wealth managers

Depends on time in the cycle, industry now reasonably mature thus large PE firms compete
Competition for deals
Firms will often co-invest to split financial burden and risk of investment
Large firms include KKR, Blackstone, TPG, Carlyle, Bain Capital

Resources
Revenue “ and typically an annual 2% fee on assets committed to the PE firm, then
Profitability 20% share in profits that the underlying investments hopefully generate
Overview Costs = salary and remuneration to PE firm employees and partners, research and diligence

82
V. Industry – Checklist of industries to explore

Overview
❑ Agribusiness ❑ Defense ❑ Oil & Gas
❑ Advertising ❑ Dentists ❑ Pharmaceuticals
❑ Air transport / Airlines ❑ Doctors ❑ Poultry Production

Interview Prep
❑ Alcoholic Beverages ❑ Drugstores ❑ Printing and Publishing
❑ Alternative Energy ❑ Electric Utilities ❑ Private Equity
❑ Automotive ❑ Electronics Manufacturer ❑ Professional Sports
❑ Bars and Restaurants ❑ Food Stores ❑ Railroads
❑ Books & Magazines Retail ❑ For-profit Education ❑ Real Estate
❑ Car Dealers ❑ Funeral Services ❑ Recycling

Fit Interview
❑ Casinos ❑ Government (local / regional / ❑ Student Loan Companies
❑ Cattle Ranchers national) ❑ Steel Production
❑ Clergy & Religious Organizations ❑ Gym Studios ❑ Sugar Cane Production
❑ Clothing Manufacture ❑ Highway Concessions ❑ Telecom Services (mobile and
❑ Coal Mining ❑ Hospitals fixed)
❑ Colleges, Universities, Schools ❑ Hotels ❑ Timber, Logging & Paper Mill

Case Interview
❑ Coffee Shops ❑ House Appliances Retail ❑ Tobacco
❑ Computer Software ❑ Infrastructure ❑ Transportation (urban)
❑ Commercial Bank ❑ Internet and Cable TV ❑ Trash Collection
❑ Contractors ❑ Insurance Company ❑ Travel Agency
❑ Credit Card Company ❑ Libraries ❑ Utilities
❑ Cruise Ships ❑ Media / TV ❑ Venture Capital
❑ Dairy ❑ Music Production

Resources
This is a long list of industries to have in mind. Try to discuss for each one of those what are the relevant sources of
revenues, what is the cost structure and what are the customer drivers. It’s better to have a basic idea of the industry
in the interview day than to see yourself stuck trying to figure out how a clergy organization makes money!

83
VI. Firm Brief – Accenture

Overview
TypicalInterview
Typical InterviewFormat
Format AccentureOverview
Accenture Overview

Interview Prep
Combination of case and experience In the world of strategy today, it is about the
interviews future, and in the future, technology is the
1 case interview, 1 fit disruptor. Digital technology is changing
1st Round
interview (45 minutes) competitive landscapes and creating new
opportunities for almost every organization. This
2nd Round 1 case interview, 1 fit
situation plays directly to Accenture's strengths.

Fit Interview
interview (45 minutes)
With Accenture Strategy, we have created what
we believe is the strategy firm of the future.
Career Progression 200 cities, 50 countries, 11 innovation hubs in

Case Interview
U.S.
5,000+ Accenture Strategy employees
Managing Regional staffing model
Director 5 broad industry groups and 19 sub-industry
Senior groups
Manager Manager 6 functional service areas

Resources
Senior New consultants join as generalists in ASCDP
consultant (Accenture Strategy Consultant Development
Program)

84
VI. Firm Brief – Kearney

Overview
TypicalInterview
Typical Interview Format
Format A.T. Kearney
Kearney Overview
Overview

Interview Prep
2 rounds of interviews Distinctive, collegial culture that transcends
organizational and geographic boundaries. Our
One 45 min case interview, one
1st Round consultants are down to earth, approachable,
45 min behavioral interview
and have a passion for doing innovative client
(virtual)
work. We always seek to deliver both immediate
Two 45 min case interviews and impact and growing advantage to our clients and

Fit Interview
2nd Round One 45 min behavioral our people.
interview (in-person)
58 global offices
More than 40 countries
Career Progression

Case Interview
4,200 people, 350 partners
National staffing model
15 industry groups
Partner
10 functional practice areas
Principal
Manager

Resources
Associate

85
VI. Firm Brief – Bain & Company

Overview
TypicalInterview
Typical Interview Format
Format Bain&Overview
Bain Co Overview

Combination of case and experience

Interview Prep
Core capabilities in strategy, technology, digital,
interviews marketing, organization, operations, advanced
Successful candidates participate in two to analytics, transformations and mergers &
three rounds of two or three 40-45 minute acquisitions.
interviews each
ststRound
11 round 2 case interviews 56 global offices

Fit Interview
36 countries
2nd Round 3 case interviews, 1 behavioral 13,000+ employees
interview* Home-office, personalized staffing model
22 industry groups
Career Progression

Case Interview
14 functional practice areas

Partner
Associate
Sr. Partner
Manager

Resources
Manager
Consultant

*TBD - could be one super day with 3 cases and 1 behavioral 86

VI. Firm Brief – Boston Consulting Group

Overview
TypicalInterview
Typical InterviewFormat
Format BCGOverview
BCG Overview

Interview Prep
Combination of case, written case and Our mission is clear. We go deep to unlock
experience interviews, depending on office insight and have the courage to act. We bring
Successful candidates participate in one round the right people together to challenge
of two 45-minute interviews each. established thinking and drive transformation.
We work with our clients to build the
1st Round 1 online written case interview capabilities that enable organizations to achieve

Fit Interview
(November) sustainable advantage. We are shaping the
2nd Round 2 45-minute case interviews with future. Together.
behavioral component (virtual)
100 global offices
Career Progression

Case Interview
50+ countries
Personalized staffing model - access to local
Managing office and larger regional / global case work
Director & 16 industry groups
Partner 19 capabilities
Principal Partner
Project (MDP) 25,000 employees

Resources
Leader
Consultant

87
VI. Firm Brief – Deloitte

Overview
TypicalInterview
Typical Interview Format
Format DeloitteOverview
Deloitte Overview

Interview Prep
Combination of case and experience Deloitte Consulting is comprised of three service
interviews areas: Strategy & Operations, Technology, and
Human Capital. Our professionals bring deep
1st Round 2 in-person case interviews industry experience, rigorous analytical
capabilities, and a pragmatic mindset to our
3 in-person case interviews and 1 clients’ most complex business problems.

Fit Interview
2nd Round behavioral interview
126 US offices; 150+ countries
121,000 US employees: 345,000 global
employees
Career Progression

Case Interview
Global brand due to being part of one of the
largest professional services firms
Principal National staffing model
Six industry groups
Senior
Seven functional service areas
Manager
Manager

Resources
Senior
Consultant

88
VI. Firm Brief – EY Parthenon/EY Consulting

Overview
Typical Interview Format EY Overview
EY Overview

Combination of case and experience

Interview Prep
EY is the most globally-integrated professional
interviews services organization providing professional
One or two rounds of interviews services to companies around the world, from
EYP: 1 2 case interviews (45 minutes) + start-up entrepreneurs to multinationals.
Round 1 behavioral interview
Working at EY gives you the chance to develop

Fit Interview
EYC: 2 1: Case & behavioral world-class cross-cultural skills and knowledge
Rounds 2: Case, Client Simulation, Team by working with people from different countries
Case and in different industries. You’ll be part of an
organization that is able to think in a connected
Career Progression

Case Interview
way across geographical boundaries and
industry sectors.

Partner ~300,000 employees

Senior 60+ offices
Director Director EYP: Generalists or alignment to one of 2

Resources
Senior specialty practices: Deal Tech and Software
Consultant Strategy
EYC: Tech Transformation Strategy & Ops

89
VI. Firm Brief – L.E.K.

Overview
TypicalInterview
Typical InterviewFormat
Format L.E.K.Overview
L.E.K. Consulting Overview

Interview Prep
Combination of case and experience L.E.K. is a global strategy consulting firm with
interviews offices across Europe, the Americas and Asia-
Two rounds of interviews (virtual - TBC) Pacific. We counsel our clients on their key
Final round includes a written case strategic issues, leveraging our deep industry
1st Round 2 case interviews (45 minutes expertise and using analytical rigor to help them
each) make informed decisions more quickly and solve

Fit Interview
3 case interviews (45 minutes their toughest and most critical business
nd
2 Round each, with 1hr prep) problems.

Career Progression 14 countries

Case Interview
20 global offices
1,800 professionals globally
Office-based staffing model, with opportunity
Managing to rotate sectors every 6 months
Principal Director 15 industry groups
4 functional service areas

Resources
Manager
Low to no travel
Consultant

90
VI. Firm Brief – McKinsey & Company

Overview
TypicalInterview
Typical InterviewFormat
Format McKinseyOverview
McKinsey Overview

Interview Prep
Combination of case and experience McKinsey & Company is a global management
interviews consulting firm that serves leading businesses,
Candidates participate in two rounds of two or governments, non governmental organizations,
three 45 minute interviews each. and not-for-profits. We help our clients make
Some offices use a 3-interview "power-round" lasting improvements to their performance and
1 interview, each containing a realize their most important goals. Over nearly a

Fit Interview
st
1 Round case and a behavioral portion century, we’ve built a firm uniquely equipped to
2 interviews, each containing a this task.
nd
2 Round case and a behavioral portion
100 global offices

Case Interview
Career Progression 60 countries
22 industry groups
12 functional practice areas - apply as
Partner generalist or align with a practice
Associate 40,000 consultants, 1,500 partners
Partner National staffing model

Resources
Engagement
Manager
Associate

91
VI. Firm Brief – Roland Berger

Overview
TypicalInterview
Typical Interview Format
Format RolandBerger
Roland BergerOverview
Overview

Interview Prep
Combination of case, written case and Roland Berger is a global strategy consulting firm
experience interviews headquartered in Munich. It operates as a
Two rounds of interviews generalist strategy consultancy and advises
1 45-minute case interview, clients on management issues ranging from
st
1 Round including behavioral (in-person) strategy development to performance
improvement. Roland Berger advises in the

Fit Interview
fields of restructuring and marketing, with a
1 45-minute behavioral interview;
2nd Round 1 45-minute case interview (both focus on the automobile industry and the capital
goods sector.
virtual)

Case Interview
Career Progression 51 global offices, 3 US
2,700+ global employees, 200+ US
Partner 9 industry groups, 3 US
6 functional practice areas
Principal

Resources
Project
Senior Manager
Associate

92
VI. Firm Brief – Simon Kucher & Partners

Overview
Typical Interview Format Simon Kucher Overview

Combination of case and

Interview Prep
Simon Kucher is the world’s leading pricing
experience/behavioral interviews consultancy and a top player in marketing and
Two rounds of interviews sales consulting. Simon-Kucher stands for
unlocking growth, and their mission is to boost
1st Round 1 45-minute case interview, clients’ revenues and profits. They are growing
constantly and dynamically, and always looking

Fit Interview
for people who are analytical, good
3 45-minute case interviews with communicators and entrepreneurial. They have
2nd Round behavioral mixed in the highest standards and hire only the best and
brightest. And then they help their people grow.

Case Interview
Career Progression 42 global offices in 27 countries; 7 US offices
2,000 global employees
Partner
Director

Resources
Manager
Senior
Consultant

93
VI. Firm Brief – Strategy&

Overview
Typical Interview Format Strategy& Overview

Combination of case and experience

Interview Prep
When you join Strategy&, you join a global team
interviews with a proud heritage of pioneering ideas and
One round of interviews thought leadership. Our culture will encourage
3 interviews: you to speak up and challenge conventional
- 2 case interviews and 1 thinking, and our environment will offer you
structured mentorship tailored to your

Fit Interview
behavioral interview
Power professional development. You’ll become part of
Round OR
a community of exceptional professionals and
- 3 case interviews, with learn and grow with people dedicated to helping
behavioral components you succeed.

Case Interview
Career Progression
80+ global offices in 41 countries
3,000+ global employees
Partner
National staffing model
Director

Resources
Manager/
Senior Sr.
Associate Manager

94
VI. Firm Brief – ZS Associates

Overview
TypicalInterview
Typical Interview Format
Format AssociatesOverview
ZS Associates Overview

ZS is a global professional services firm that

Interview Prep
Combination of case and experience
leverages deep industry expertise, leading-edge
interviews analytics, technology and strategy to create
solutions for clients that work in the real world. ZS
2 interviews (30 minutes each, works with companies around the world and across
1st Round the marketplace, in industries ranging from
1 case and 1 behavioral)
healthcare to high-tech to financial services and

Fit Interview
3 interviews (30 minute beyond. ZS helps clients with everything from
2nd Round behavioral, 30 minute discovery through to commercialization, with the
strategy, analytics and technology to enable it. Our
unstructured case, 60 minute mission with our clients is to work side by side with
structured case) them to help develop and deliver products that
Career Progression drive customer value and company results.

Case Interview
14 countries
29 global offices
Principal 3 capability groups
Associate Business Consulting
Business Technology
Manager principal

Resources
Business Operations
Regional staffing model
Consultant
11 industry groups
6 functional service areas

95
VII. Geographic Recruiting - US Continental Overview

Overview
Note: these are generalized considerations – as with all things in consulting, individual experience will vary
This section is to serve as a reference guide to better understand many of the largest consulting
offices and cities where Booth students land internship and full-time offers.

Interview Prep
It is not intended to highlight cities with a higher likelihood of success, nor is it meant to serve as the
single point of truth.
Please use your best judgment to connect with folks from regions you are interested in to gain new
perspective and determine what is best for you.

Fit Interview
US Placement At-A-Glance
3%3%
4%
9% Midwest

Case Interview
Northeast
US 38%
West
25%
International Southwest
Mid-Atlantic
91%
South

Resources
26%

Source: Chicago Booth Full-Time MBA Employment Report, 2021

96
VII. Geographic Recruiting – US Cities at a Glance

Overview
Note: these are generalized considerations – as with all things in consulting, individual experience will vary

Individual city experiences will vary based on neighborhood, personal interests, and other factors

Interview Prep
Cost of Living Diversity Activities Food % Placement 2021

Mid Chicago ✔✔ ✔✔✔ ✔✔✔ ✔✔✔ 30.5%

west ✔✔ ✔✔ ✔✔ ✔✔
Minneapolis 2.3%

North New York ✔✔✔✔ ✔✔✔✔ ✔✔✔✔ ✔✔✔✔ 20.6%

Fit Interview
east ✔✔✔ ✔✔✔ ✔✔✔ ✔✔✔
Boston 3.1%

Bay Area ✔✔✔✔ ✔✔✔✔ ✔✔✔✔ ✔✔✔✔ 14.1%

US
West Seattle ✔✔✔ ✔✔✔ ✔✔✔✔ ✔✔✔✔ 5.5%
Regions/C
ities Los Angeles ✔✔✔ ✔✔✔✔ ✔✔✔✔ ✔✔✔✔ 2.4%

Case Interview
South Dallas ✔ ✔✔ ✔✔ ✔✔✔ 1.3%
west ✔ ✔✔ ✔✔ ✔✔✔
Houston 1.1%

Mid- Washington, DC ✔✔✔ ✔✔✔ ✔✔✔ ✔✔✔ 1.6%

Atlantic ✔✔ ✔✔ ✔✔ ✔✔
Philadelphia 1.3%

South ✔ ✔✔ ✔✔ ✔✔ 2.7%

Resources
Source: Chicago Booth Full-Time MBA Employment Report, 2021

97
VII. Geographic Recruiting – Midwest Cities

Overview
Note: these are generalized considerations – as with all things in consulting, individual experience will vary

Chicago, IL Minneapolis, MN

Interview Prep
Fit Interview
Notes: Notes:
Long winter season (November - April/May), but not Good culinary and bar culture
unbearable Fun outdoors scene during the summer (biking,

Case Interview
Expect lots of travel with central US location stand-up paddle boarding, outdoor concerts)
Convenient transportation system Long winter season, even colder than Chicago
Several neighborhoods throughout the city offer Expect lots of travel with central US location
cultural diversity Key Industries: Healthcare, Industrials, CPG, Energy,
Excellent museums and activities during winter and Agriculture
summer
Strong college and professional sports culture

Resources
Key Industries: CPG, Industrials, Automotive, Travel
& Tourism, Healthcare

98
VII. Geographic Recruiting – Northeast Cities

Overview
Note: these are generalized considerations – as with all things in consulting, individual experience will vary

New York, NY Boston, MA

Interview Prep
Fit Interview
Notes: Notes:
Four seasons (similar to Chicago but milder winters) Four seasons (winters less cold than Chicago but more
Second highest cost of living in US after the Bay area snow)
Good availability of projects within the tri-state area and High cost of living (~80-90% of NYC)

Case Interview
travel (your choice) Good availability of projects within the Boston area and
Highest concentration of restaurants, nightlife, cultural travel within the Northeast (your choice)
institutions, and sporting establishments in the US Nestled in New England, one of the most scenic regions in
Extremely diverse the country. Lots of great outdoors for all seasons.
Very Metropolitan / compact (car not practical) Significant professional sports scene
Lots of natural beauty in upstate NYC, Hamptons, or New Very Metropolitan / compact (car not practical)
England Rapidly growing city
Key Industries: Financial Services, Pharmaceuticals TMT, Key Industries: Asset Management, Pharmaceuticals /

Resources
Retail / Luxury Biotech, Education, Healthcare, Consumer Products
Most industries have some presence in NYC

99
VII. Geographic Recruiting – West Coast Cities

Overview
Note: these are generalized considerations – as with all things in consulting, individual experience will vary

San Francisco, CA Los Angeles, CA Seattle, WA

Interview Prep
Fit Interview
Notes: Notes: Notes:
Easy access to nature - hiking, beaches, Warm/temperate weather year-round City is surrounded by water, mountains,
national parks, etc. Competes with NYC as top 2 city in the and evergreen forests so close to
Temperate weather year round (but US for access to entertainment, nature and tons of outdoor activities

Case Interview
note the very cold and foggy summers!) nightlife, restaurants, cultural Pacific Northwest climate relatively
Close to skiing, wine country, panoramic institutions, etc. temperate year-round with wet winters
vistas everywhere High cost of living You’ll find many unique neighborhoods
Significant pro sports presence Significant pro sports presence and a vibrant food and arts scene
High cost of living Great outdoors High cost of living but relatively
cheaper than other major West Coast
Limited public transportation system Very diverse
cities
(BART for commuting within the Bay Extremely spread out, heavy commuter

Resources
Area, Muni for commuting within SF) As a fast-growing city, traffic can also
city with lots of traffic (will most likely
get pretty bad
Many firms also have Silicon Valley need a car)
office No state income tax!
Key Industries: Aerospace, Tech,
Key Industries: Tech, PE/VC, Entertainment, Retail, Manufacturing Key Industries: Tech, Retail/Consumer,
Healthcare/Pharma, Retail/Consumer Healthcare

100
VII. Geographic Recruiting – Southwest Cities

Overview
Note: these are generalized considerations – as with all things in consulting, individual experience will vary

Denver, CO Dallas, TX Houston, TX

Interview Prep
Fit Interview
Notes: Notes: Notes:
City surrounded by Rocky Mountains so More than 400 parks and significant Robust international community that
lots of good outdoor activities, arts district drives cool arts/cultural scene and
including hiking/skiing/climbing Easier access to Texas ‘hill country’ great restaurant options (in addition to

Case Interview
Vibrant restaurant and bars scene BBQ)
Strong neighborhood culture, robust
Quieter and more affordable than ‘on Mexican/LATAM community 4th largest city in the country;
the coast’ West cities substantial arts and music scenes
Hot climate, with hot summers and
Great music scene, active population mild winters Easier access to Galveston and Gulf
beaches
Rapid rate of growth Robust sports culture
Robust sports culture
Key Industries: Healthcare, Industrials, No state income taxes!
Energy, Retail/Consumer, Agriculture, No income taxes!
Key Industries: Consumer/Retail,

Resources
some Tech Travel/Tourism, TMT, Energy, Public Key Industries: Energy, chemicals,
Sector, Healthcare healthcare, retail/consumer

101
VII. Geographic Recruiting – Mid-Atlantic Cities

Overview
Note: these are generalized considerations – as with all things in consulting, individual experience will vary

Washington, DC Philadelphia, PA

Interview Prep
Fit Interview
Notes: Notes:
Nation’s capital, with good outdoors access, thriving Historical city with significant arts and museum
museum and arts scene, and good bars and restaurants presence

Case Interview
Youthful city, large and active international population;
Significant professional sports culture
varied neighborhoods, large suburbs population and
community Lively downtown scene with good restaurants and
Four distinct seasons in a temperate environment (though bars
quite hot and humid in the Summer); easy access to nearby Close collaboration with other mid-Atlantic offices,
nature with the Chesapeake Bay and Appalachian Mountains easy access to NYC
Can be a highly ‘political’ town with large temporary
Key Industries: Energy, healthcare, public sector,
population (depending on political climate/party in control)
financial services, retail/consumer

Resources
Robust sports community/scene
Key Industries: Government / public sector, social impact,
aerospace and defense, healthcare, financial services

102
VII. Geographic Recruiting – Southern Cities

Overview
Note: these are generalized considerations – as with all things in consulting, individual experience will vary

Miami, FL Atlanta, GA

Interview Prep
Fit Interview
Notes: Notes:
Easy access to great food and beaches Good culinary and bar culture
Diverse city with a strong Latin Hot and humid summers but mild winters

Case Interview
American cultural influence Very neighborhoody vibe and culture
Fun outdoors scene all year round with lots of
Can be surprisingly affordable outdoor hiking options
Cold weather does not exist (summers Access to one of the largest international airports
get very hot, humid, and rainy) in the country
Limited public transportation Expect lots of travel to South and central US

Resources
locations (fair amount of local work too)
Key Industries: Travel & Tourism, Retail
Key Industries: CPG, Retail, Travel ad Tourism,
& Consumer, Real Estate Industrials, Energy and Utilities

103
VII. Geographic Recruiting – International Overview

Overview
Note: these are generalized considerations – as with all things in consulting, individual experience will vary
General Guidelines

Understand the local office’s recruiting process:

Interview Prep
Application: Research recruiting timelines,
application deadlines, language
requirements, sponsorship eligibility, and
application materials requirements
Networking: Understand the local office’s
expectations for networking

Fit Interview
Interview: Practice with sponsored students,
2Ys, and firm reps to understand the local
office’s case styles and expectations

Seek out office-specific resources:

Sponsored students and 2Ys who interned at

Case Interview
the office are extremely valuable in helping
to navigate the recruiting process, network,
and prepare for interviews
Recruiter contact information can be found
through the companies’ official websites, on- On-Campus Resources:
campus representatives, and career services MCG workshops, events, and office hours
Check company websites, GTS, and MCG

Resources
Your classmates (sponsored students and second-years)
newsletters regularly to participate in local Affinity groups (if applicable)
office-sponsored webinars Career Services

104
VIII. Zoom Best Practices (Overall)

Overview
Technology Attire, Surroundings
Join the meeting ~10 minutes before the start time Follow recommended dress attire. Interviews are

Interview Prep
Use earbuds / headphones for audio, if possible business professional; it helps to practice in business
Use your phone for audio (use Zoom dial-in or call-me casual occasionally. Wear shoes, even on Zoom it’ll
features or similar). That way if you have computer / make it feel like the real thing (because soon it will be)
internet issues the audio won’t be interrupted Set neutral or virtual background, and check video for
Hardwire your computer to the modem, if possible good lighting before starting the interview
Make sure that your Zoom profile shows your
first and last name (and pronoun, if desired)

Fit Interview
Communication
Avoid reading from a screen or notes from a paper make eye contact with either the camera (preferred) or the screen
Be clear and concise in your messaging. When giving structured answers, ‘lay out the framework’ before filling in the
blanks e.g., “I have things I’d like to explore… the first is xyz

Case Interview
It’s ok to ask additional clarifying questions if you didn’t hear something clearly over Zoom. This is normal and expected
Walk your interviewer through any math before you start be sure to tell them why you’re doing your calculations
Maintain physical presence as you would for an in-person interview, bring your best energy, and smile! ☺

Troubleshooting
Tech challenges happen often. Don’t panic, note where the conversation was interrupted, and reach out to your contact

Resources
(might be the interviewer, might be the recruiter) to re-establish connection
Interruptions will not materially impact your interview if you don’t let it. Stay calm - remain a professional. Consultants
experience this with clients - it happens. They will appreciate your composure should it happen during your meeting
If you have computer or internet issues consider switching to your phone to join the interrupted meeting

105
VIII. Zoom Best Practices (Dress Code)

Overview
As a reminder, dress code applies the same over Zoom as it does for in-person interactions with firms. Be aware
of your appearance as it reflects not only on yourself but on the class and school, and is a consideration for
‘client readiness’ with many firms.

Interview Prep
Dress Code Basics
Business Formal/Professional: interviews only (i.e. no MCG events require business formal attire)
Business Casual: most MCG and firm-facing events (e.g. Meet & Greets, coffee chats, info sessions, etc.)
Grooming and hygiene are crucial: hair is neat and combed, facial hair is groomed

Fit Interview
Be conservative and use best judgment: shirt and suit patterns, accessories, dress length, cleavage, women’s
shoes (i.e. professional shoe/heel vs. what you wear out), etc.

Business Formal Business Casual

Women Matching skirt/dress/pants and blazer Dress/skirt/pants + nice blouse, sweater, or blazer

Case Interview
Skirts should be appropriate length Skirts should be appropriate length
Closed-toe shoes Shoulders should be covered
Closed-toe shoes

Men Full suit Matching suit pants Suit jacket Dress pants (matching optional)
Dress shirt Dark dress shoes Dress shirt Dark dress shoes

Resources
Tie

106
Practice Case Compendium

107
Tips for Giving an Effective Case
There are many ways to give a case. Case structure, tone, format, and content will vary by interviewer, by firm, by office, by
geography. We do recommend the following to help both yourselves and your classmates become more effective casers and
candidates:

Ask your partner if there is something they want to work on in advance (or if there is common feedback they’ve
received)
Practice casing with intent. Have an area you want to specifically focus on improving, then target that area during the practice
case
Take the casing process seriously
Now is the time to congratulate your friends and case partners for doing something well, and at the same time not let them off
the hook for their mistakes doing so will only jeopardize their chances of doing well when it really matters
Do not joke around during the case treat these as formal encounters to get in practice for the real deal
Read the case fully through beforehand, and think through how you might solve it and what mistakes you might
make or challenges you may encounter
If there is a quant piece, solve it in advance so you’re not solving along with the interviewee
If the case covers a subject area industry or function you don’t know well, do a quick review from the industry and functional
frameworks found in this book or provided in the MCG Google Drive
Do not unnecessarily ‘help’ your partner along
If there is uncomfortable silence, or they’re going down the wrong path you can ‘nudge’ them in the right direction, but only after
you’ve given them a fair shot to figure it out themselves
Let them be wrong for a time before pushing them in the right direction. Learning how to ‘get out of a hole’ is a critical part of
the case learning curve
Take detailed notes during the case, and provide unvarnished and honest feedback
Leverage the case feedback template in the MCG Google Drive to structure your feedback by case component

108
Index of Practice Cases (1 of 3)
PAGE CASE # CASE NAME FIRM CASE TYPE INDUSTRY QUANTS LEVEL

112 1 Army Hotel McKinsey & Company Market Entry Hospitality Medium

117 2 Breast Cancer Surgery L.E.K. Consulting Profitability Healthcare Light

121 3 Burger Palace Undisclosed Market Entry Restaurants, Food & Beverage Medium

127 4 Chicken Pox Vaccine Undisclosed Market Sizing Pharmaceutical/Healthcare Heavy

133 5 Cleaning Products McKinsey & Company Growth Strategy Consumer Products Medium

138 6 Coffee and Tea Apparel Deloitte Mergers & Acquisitions Retail & Apparel Heavy

145 7 Commercial Vehicle OEM in China Strategy& Growth Strategy Transportation & Automotive Medium

150 8 Consumer Products Strategy BCG Market Entry Consumer Products Medium

156 9 Contact Lenses McKinsey & Company Profitability Consumer Products Medium

165 10 Deepwater Inc. Undisclosed Investment Decision Energy Light

170 11 Electric Utility McKinsey & Company Profitability Energy Light

175 12 Elena's Electronics Undisclosed Profitability Consumer Electronics Heavy

181 13 Finance Co Bain & Company Growth Strategy Financial Services Heavy

187 14 French Beauty Co Accenture Operating Model Retail & Apparel Light

192 15 German Telecom BCG Profitability Telecommunications Medium

197 16 Green Co Deloitte Investment Decision Retail & Leisure Heavy

203 17 GreenShield Health Insurance Strategy& Market Entry/Market Sizing Financial Services & Insurance Medium

209 18 Hawaiian Smoothies BCG Market Entry Restaurants, Food & Beverage Medium

214 19 Heavy Attrition Z.S. Associates Organizational Change Healthcare Light

218 20 International Airlines Bain & Company Profitability Transportation Light

224 21 Katrina BCG Non-traditional Problem Non-profit/Education Medium

109
Index of Practice Cases (2 of 3)
PAGE CASE # CASE NAME FIRM CASE TYPE INDUSTRY QUANTS LEVEL

228 22 Brand Builders Inc. Bain & Company Cost benchmarking/Portfolio mgmt. Consumer Products Medium

234 23 Lola Lo’s Zoo Undisclosed Investment Decision Entertainment Heavy

240 24 Lost Patent A.T. Kearney Revenue Pharmaceutical/Healthcare Light

244 25 Midwest Machinery Co. Bain & Company Sourcing/Outsourcing Industrial Goods Heavy

250 26 New Vaccine L.E.K. Consulting Market Entry Pharmaceutical/Healthcare Medium

256 27 Payments Company Deloitte Profitability Financial Services Medium

262 28 Pharmaceutical Rare Disease BCG Growth Strategy Pharmaceutical/Healthcare Medium

267 29 Project Gargoyle Bain & Company Investment Decision Hair Care Products Medium

276 30 PyeongChang Winter Olympics McKinsey & Company Investment Decision Tech, Media, & Telecom Heavy

280 31 Quahog Public Schools McKinsey & Company Non-traditional Problem Non-profit/Education Medium

285 32 Retirement Apartment Complexes Undisclosed Profitability/Market Entry Real Estate Medium

291 33 Skylight Goods BCG Operations Industrial Goods Heavy

301 34 Smart Cards McKinsey & Company Growth Strategy Tech, Media, & Telecom Light

307 35 Student Health Insurance Deloitte Growth Strategy Financial Services & Insurance Medium

318 36 Super Jr. Baby Formula Bain & Company Investment Decision Consumer Products Medium

328 37 Apache Helicopter Undisclosed Market Sizing/Cost-Benefit Analysis Industrial Goods Heavy

335 38 White Boards Bain & Company Sourcing/Outsourcing Durable Goods Medium

340 39 Telco Talks Accenture Mergers & Acquisitions Telecommunications Medium

345 40 Yarmouth Yachts Cornerstone Research Legal Analysis Luxury Retail Light

352 41 Sueno Mattress KPMG Strategy Profitability Consumer Products Medium

357 42 Cruise Line Acquisition BCG Profitability Travel & Tourism Medium

110
Index of Practice Cases (3 of 3)
PAGE CASE # CASE NAME FIRM CASE TYPE INDUSTRY QUANTS LEVEL

357 43 Cruise Line Acquisition EY Parthenon Profitability Travel & Tourism Medium

364 44 Shoe Co. Bain & Company Market Entry Consumer Packaged Goods Medium

376 45 Brand Builders Inc. Bain & Company Market Entry Telecommunications Medium

111
 Quant Level – MEDIUM

Case #1: Army Hotel (1/5) Case Type Industry Client Type

Market Entry Hospitality Private Equity

McKINSEY & CO – Round 1 – Interviewer Driven

Fit Questions Interviewer Guidance

1. Why consulting? This case helps candidates understand that investors’ interests are usually two-fold: profitability
2. Tell me about a time when you had to face a significant of the investment and their own financial hurdles. In order to be successful in this case,
challenge. candidates must also gain an understanding of the market and competition. McKinsey cases are
interviewer driven, so you will ask all the questions listed. However, do assess the candidate on
their ability to drive the case forward.

Fit Evaluation
Overall Fit Performance
S1 O1 A1 R1
2 2 2 2

Case Prompt Case Development

Our client is a PE firm that has the opportunity to invest in building a 400-room hotel on an army base. The idea was 1. Framework
given to the PE firm by the army. 2. Pricing analysis
3. Revenue analysis
The government has decided to give our client the land for free our client can build the hotel and keep all of the 4. Cost analysis
profits. Our client has hired you to find out what they need to know to determine if they should build it or not.
5. Recommendations
Case Evaluation
Structure and Framework

Analytical and Problem Solving Ability

Communication and Positive Attitude

Synthesis and Recommendation

112
Case #1: Army Hotel (2/5)
Framework Interviewer Guidance
Working hypothesis: The PE firm should build the hotel. The purpose of the hotel is for the use of soldiers at the base for training as well
as for temporary housing for those who have been relocated to the base.
Hotel Market
Competition If asked, provide the candidate with the following information:
Number of hotels
Location Competition
Customers There are three existing hotels near the base and each are approximately 20
Soldiers miles away from it. The nightly rates for each hotel are:
Proximity to base Hilton ($110/night)
Hampton Inn ($75/night)
Profitability
Days Inn ($40/night)
Revenues
Demand/Occupancy
Occupancy
# of rooms
There are two training classes held at the base:
Pricing
WTP Basic Officer Training: 200 soldiers per class; class lasts 10 weeks and is
held 5 times per year.
Non-occupancy revenues
Costs Advanced Officer Training: 50 soldiers per class; class lasts 4 weeks and
Capital expenses is held 10 times per year.
Building/investment Temporary housing: Soldiers are transferred every 3 years and are given
BE timeline 15 days to find a permanent place to stay. There are 9,000 active duty
Operational expenses soldiers subject to this rotation.
Labor
Maintenance

Client interests (PE firm)

Portfolio mix
Financial and operational investment goals
Exit opportunities
Opportunity cost

113
Case #1: Army Hotel (3/5)
Question: Pricing Strategy Interviewer Guidance: Pricing Strategy
The Army will reimburse soldiers $75 per night (per diem). How much would Probe the student to determine how much per night the hotel will charge
you charge at the hotel? and what services should be included.
The candidate should consider how much breakfast and dinner will cost
Clarify that this per day reimbursement is also intended to cover the soldiers’ the soldier and ensure that those costs in addition to the nightly rate will
breakfast and dinner. not exceed the stipend.
The candidate should recognize that the Days Inn ($40/night) is the only
competitive option the soldier is likely to consider, and should discuss how
the distance away (20 miles) might also impact this decision, as well as
what amenities are included.

Question: Revenue Interviewer Guidance: Revenue

Assume for purposes of the rest of the case that the client decides the hotel Candidate should use occupancy information in previous slide to compute
will charge a fee of $60/night. revenue:

Assuming that the classes and relocation of soldiers are the only sources of
Type of Times/ Total rooms/
revenue, what is the total potential revenue per year for the hotel? People # Time Period
training year year

Basic 200 10 weeks 5 70,000

Advanced 50 4 weeks 10 14,000
Temp. 3,000 15 nights 45,000

Total rooms/yr. = 129,000 (round to 130,000)

Total revenue = $7.8 million @$60 per night

114
Case #1: Army Hotel (4/5)
Question: Costs Interviewer Guidance: Costs
Having addressed the revenue side let's talk about costs. What are the costs Annual operating costs
associated with operating a hotel? Candidate should list off relevant fixed and variable operating costs such as
labor, supplies and utilities.
If the candidate has not yet touched upon initial investment costs, probe Tell them to assume total Op-ex of $4 million per year.
them to do so by asking:
Upfront investment cost
What are the other costs associated with running a hotel? The candidate should talk about investment costs.
Tell them that the Hampton Inn made an initial investment of $50,000 per
room. The same costs can be assumed for client’s our hotel.
Candidate should calculate a total initial investment of $20 million to build
a 400 room hotel.

Question: Capacity Interviewer Guidance: Capacity

Are there any issues that may keep the hotel from attaining the calculated We are looking for the candidate to touch on capacity issues.
revenue?

After the candidate identifies the capacity issue, state that “during their The candidate should revise revenue calculation:
busiest part of the year, which lasts four months, the hotel runs a capacity 80 rooms x 4 months x 30 days per month = 9600 rooms per year (round
shortage of 0 rooms per night.” this to 10,000 rooms)
So, the new number of rooms are 120,000 x $60 per night = $7.2M/ year in
The candidate should then recalculate the revenue projection created earlier annual revenue
and to determine the operating profit. Therefore operating profit is $7.2 M (Revenue) - $4M (Operating Cost) =
$3.2M per year (profit)

115
Case #1: Army Hotel (5/5)
Question: Breakeven Interviewer Guidance: Breakeven
Assume the client wants to breakeven within 4-5 years, what is the breakeven Breakeven time = fixed costs (investment) / operating margin: $20M /
point for the PE firm? $3.2M = 6-7 years.

Once calculated, probe the candidate by asking, “Is this a good rate of return? Probe the candidate to come up with some ideas and suggestions to
Why do you think this?” decrease breakeven period:
Add a restaurant to the hotel
Once the candidate responds, ask, “What can be done to decrease the Host army conferences
breakeven period?
Find ways to decrease costs or increase occupancy

Recommendation Risks and Next Steps

The PE firm should not invest in the army hotel: Risks
Annual operating profits are $3.2M May lose opportunity for decreasing BE timeline by augmenting non-
This results in a breakeven period of 6- years, exceeding the firm’s goal of occupancy revenue (ex. restaurants and amenities) and by reducing costs
4-5 years Trainings may change and occupancy estimations may be inaccurate
Current army per diem does not allow for increases in the price of the Opportunity cost for PE firm
hotel/night
Next Steps
Analyze the financial impact of non-occupancy revenue and explore areas
of cost reduction
Look for other army bases with lower costs and/or higher occupancy
demands
Look for other investments that have a BE time period of 4-5 years

116
 Quant Level - LIGHT

Case #2: Breast Cancer Surgery (1/4) Case Type Industry Client Type

Medical device
Profitability Healthcare
L.E.K.– Round 1 – Candidate Led company

Fit Questions Interviewer Guidance

1. Tell me about a time you dealt with ambiguity. This is a candidate driven case. Provide the candidate with additional information only when
2. Tell me about a time you demonstrated initiative. asked. The candidate should understand that to assess the profitability of this device, they will
have to size the market as well as measure the willingness to pay for the device.

Fit Evaluation
Overall Fit Performance
S1 O1 A1 R1
2 2 2 2

Case Prompt Case Development

Our client is a large medical device corporation. They have developed a new medical device to assist surgeons in 1. Framework
breast conservation surgeries BCS . They’ve approached us to determine a revenue maximizing pricing strategy for 2. Analysis of Market potential
the device.
3. Analysis of Revenue
A breast conservation surgery is the partial removal of breast tissue found to be cancerous. This is in contrast to a potential
mastectomy, which removes the entire breast. While hopefully this device will be adopted worldwide, at the moment, 4. Final recommendation
the client would like us to determine the pricing strategy for the product in the United States only.
Case Evaluation
Structure and Framework

Analytical and Problem Solving Ability

Communication and Positive Attitude

Synthesis and Recommendation

117
Case #2: Breast Cancer Surgery (2/4)
Interviewer Guidance Framework
The candidate should develop a framework that considers the following drivers: The candidate should walk the interviewer through the framework and ask
further questions to understand the market and revenue potential. Provide
Med Device Market Potential this information when asked:
Patient
Number of breast conservation surgeries conducted per year (demand) There are around 100,000 breast conservation surgeries per year.
Provider/Clinician The device is applicable across a wide range of procedures: it can be used
Adoption rate in every breast conservation surgery.
The device is disposable, so every surgery needs a new device.
Trust in brand
The device is FDA approved.
Growth potential
There are no concerns related to quality from R&D.
Frequency rate of breast cancer in population The success rate of the device is 100%.
Currently there are no competitors, and the device would be the only
Revenue Potential product of this kind available on the market.
Willingness of clinicians to adopt the device at different price points
Med Device Co. relationship with clinicians (supplier contracts) At this point, the candidate should know that the market potential for the
device is 100,000 surgeries per year.
BCS Device
Degree of Innovation (availability of substitutes) The candidate should then inquire if we know anything about a clinician’s
Main features willingness to pay for the device. Show Exhibit 1.
Device applicability / usability across breast conservation surgeries
Success rate
Useful life, quality
Compliance to regulations (FDA)
Patent

Transition statement: I would like to begin by better understanding a clinician’s

adoption of the new device. It would be great if we had data on their willingness
to adopt the device at various price points.

118
Case #2: Breast Cancer Surgery (3/4)
Exhibit 1: Adoption

Clinician Adoption of Device By Potential Price Point

Percent
of
Surgeries

Price Per Medical Device

119
Case #2: Breast Cancer Surgery (4/4)
Calculations
Recommendation
In order to understand the willingness to pay of clinicians, the candidate The client should market the device at a price of $600 per unit
should calculate the revenue at each price point tested during the market This price allows the client to maximize the revenue potential given the
research. current willingness to adopt

Market Price / Device Willingness to Potential

Potential Adopt (%) Revenue
100,000 $0 90% $0
100,000 $300 75% $22.5M
100,000 $600 50% $30.0M
100,000 $1000 10% $10.0M

The candidate should conclude that the device price that allows the client to
achieve maximum potential revenues is $600. The candidate should also
Risks and Next Steps
conclude that greater adoption across surgeries does not necessarily lead to
greater revenues, since the benefit of higher adoption may be outweighed by Risks
a lower price point. Competitors might replicate the device and enter the market
The revenue maximizing price might not be the profit maximizing one
A strong candidate will identify that the revenue maximizing price may not be
optimal in terms of profits. Next steps
Raise the barriers to entry by patenting the product and signing exclusivity
agreements with clinicians
Move forward with the analysis including the costs to find the profit
maximizing price

120
 Quant Level – MEDIUM

Case #3: Burger Palace (1/6) Case Type Industry Client Type

Restaurants, Food & Fast Food

Market Entry
UNDISCLOSED – Round 1 – Candidate Driven Beverage Restaurant

Fit Questions Interviewer Guidance

1. Tell me about your most rewarding professional The primary objective is for the new restaurant to be profitable; Burger Palace’s management
accomplishment. will move ahead if it is. They would like to act as quickly as possible.
2. Tell me about your most difficult professional
challenge. This is a straightforward profitability case that is good practice for a candidate to drive a case.
The interviewer should not need to provide much guidance or prodding throughout the case.

Fit Evaluation
Overall Fit Performance
S1 O1 A1 R1
2 2 2 2

Case Prompt Case Development

Our client is Burger Palace, a Chicago area fast food restaurant with 20 locations. They have been approached by 1. Framework
Midway Airport about opening a new location inside the main terminal. 2. Discussion/Q&A
They have asked us to come to a meeting with their CEO and tell them if we think this would be a profitable venture.
3. Profitability analysis
How would you structure your approach to this question? 4. Final recommendation

Case Evaluation
Structure and Framework

Analytical and Problem Solving Ability

Communication and Positive Attitude

Synthesis and Recommendation

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Case #3: Burger Palace (2/6)
Framework Interviewer Guidance
Working hypothesis: Burger Palace should open the new restaurant in Midway. Candidates will take a variety of approaches to structuring an approach to this
question. The primary things to look for are:
Will the new restaurant be profitable?
Expected revenue Did the candidate state a hypothesis?
Volume of sales estimate by looking at expected customers The candidate should express the core idea that they would like to test
Average revenue per sale estimate by looking at avg. tickets at through their analysis. They should clearly demonstrate how the questions
other Burger Palaces, customer research at Midway, or avg. ticket of they’re asking are directed at answering the specific question of whether
similar restaurants in airport Burger Palace should open a new restaurant.
Expected costs It’s less important for the hypothesis to be backed up with evidence, since
Fixed costs rent, food preparation equipment, operating expenses, it’s so early in the case though strong candidates will draw on their own
salaried labor, royalty fees to Midway airport, advertising knowledge and intuitions to develop preliminary insights about the
Variable costs hourly labor, ingredients (burger patties, buns, and potential for this new restaurant).
fries), utilities
Is profitability the primary consideration?
Will the new restaurant succeed in the airport food market? The prompt is very clear that profitability is the deciding factor for
Primary Competitors management. It’s OK for candidates to discuss other considerations, but
Are the other restaurants similar in cuisine/style? their primary focus should be on profitability.
Would the other restaurants respond to the Burger Palace opening?
Customer Profile Is the framework case-specific?
Major customer groups: passengers and employees Excellent frameworks will explore specific aspects of the Midway fast food
Would customers respond positively to the healthiness of the food, market, rather than just generic ideas about new market entry.
speed of service, price, etc.?
Execution would Burger Palace be able to successfully open and run
the restaurant, given that it’s their first airport location?

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Case #3: Burger Palace (3/6)
Market Information Market Information (cont’d)
Provide the candidate with the information below when it is requested. Push Sales Volume at Midway
the candidate to think about specific ways to estimate revenue, costs, and Let the candidate structure their own approach and ask for all of the following
profits at Burger Palace. Don’t simply disclose information if asked general information. If needed, prompt with, “How would you estimate the number of
questions about expected revenue, costs, or profits. customers that Burger Palace would have at Midway airport?”

Burger Palace Passengers

Information has not been provided about other Burger Palace locations, although we do Hours/dates of operation: 6am 10pm.
have some comparable revenue/cost information: Day open per year: 350 days
The average transaction size is $10. Gates at Midway: 25
Variable costs are approximately 80% of sales revenue. Average planes per hour: 1 per hour per gate
Fixed costs will include: Average plane size: 175 passengers
$200,000 in annual rent and fixed operating costs (includes the initial construction Average load factor: 80% (number of seats filled on average)
of the new restaurant). Passengers who will eat each day: 5% of passengers will eat at Midway
$80,000 as an annual royalty fee to Midway Airport.
Employees
Competition Number of employees: 2,000
There are currently 7 restaurants at Midway. They each have an equal market share. Employees who will eat each day: 60% of employees will eat at Midway
If Burger Palace were to open a restaurant, we expect that each of the 8 restaurants
would then gain an equal market share.
We do not expect the number of total customers to increase because of the new
Burger Palace location.
We don’t know anything about the types of restaurants currently at Midway.

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Case #3: Burger Palace (4/6)
Calculations 2/2
1/2
Number of Passengers Annual Profit
25 gates x 1 plane/hr. x 16 hrs./day = 400 planes/day $245,000 passenger profit + $105,000 employee profit = $350,000 total annual
175 capacity/plane x 80% avg load factor = 140 pax/plane profit (excl. FC)
400 planes/day x 140 passengers/plane = 56,000 pax/day $350,000 - $280,000 annual fixed costs = $70,000 total annual profit
56,000 pax/day x 1/8 BP market share x 5% eat each day = 350 pax/day at
Burger Palace (note math shortcut that 56k/8=7k) A strong candidate will identify and use math shortcuts:
Use contribution margin directly instead of revenue and variable costs separately
Contribution from Passengers (i.e. using $2 CM in one step rather than using $10 revenue and $8 costs in two
steps).
350 pax/day x $10 avg spend x 20% profit margin = $700 profit/day (excl.
Add the 350 passengers and 150 employees to a 500 customer total before
FC) computing revenues and profits.
$700 profit/day x 350 days/year = $245,000 profit/year (excl. FC)

Number of Employees
2,000 employees x 1/8 BP market share x 60% eat per day = 150
employees/day at BP

Contribution from Employees Interviewer Guidance

150 employees/day x $10 avg transaction size x 20% profit margin = $300
Some interviewees will have trouble starting the market sizing and may need a little
profit/day (excl. FC)
nudge to begin thinking in that manner. That is OK--it isn’t about whether or not they
$300 profit/day x 350 days/year = $105,000 profit/year (excl. FC) can read the interviewer’s mind--it’s about how logically they think about the problem
as they go. Do they make realistic assumptions about how many people are on a plane?
Do they account for the fact that the planes won’t all be full?

Most interviewees will miss that customers will include both passengers and Midway
Airport employees. If so, let the candidate go through calculations for passengers only,
then ask, “Would anyone else be eating at Burger Palace? Finally, proceed to the
second calculation.

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Case #3: Burger Palace (5/6)
Brainstorming: Optional Math Extension: Optional
After the candidate has identified $70 K in annual expected profit, ask, “What If the candidate identifies market share as a risk and has performed well on the
are other factors that should be considered when opening a new restaurant at math, ask, “You mentioned that Burger Palace may not be able to achieve /
Midway Airport?” market share. What is the minimum market share that Burger Palace would
need to break even?”
Potential Answers
Implementation & execution The candidate should assume that the average transaction size is the same at
Staffing the new location other restaurants at Midway ($10).
Competitive response within Midway
Assumption about Burger Palace receiving 1/8 market share Breakeven occurs when:
Customer preferences & changes to the menu Annual Costs = Annual Revenue (i.e. Profit = 0)
Brand effects for Burger Palace Annual Costs = $280k + Annual Revenues x 80% variable costs
Advertising & marketing Therefore, breakeven occurs when: $280k = Annual Revenue x 20%
Note: this could be calculated directly from the alternative approach,
breakeven occurs when: Fixed Costs = Revenue * % Contribution Margin

Market Size:
Annual Revenue = Market Share x Market Size
Market Share is unknown; Market Size is known
Market Size = (# pax/day + # employees/day) x Avg. Transaction x 350 days
Market Size = (56,000 x 5% + 2,000 x 60%) x $10 x 350 days
Market Size = (2,800 + 1,200) x $3,500 = $14M

Combining these two sections:

$280k = Annual Revenue x 20% = Market Share x Market Size x 20%
$280k = $14M x Market Share x 20%
Market Share = $280k/$2.8M = 10%

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Case #3: Burger Palace (6/6)
Risks
Recommendation
A new Burger Palace location inside Midway Airport would be profitable, so Change in market share
Burger Palace should open the new restaurant We assumed we would split market share with the other Midway
The new restaurant should expect $70,000 total annual profit restaurants. Is this completely realistic?
We expect Burger Palace to receive 12.5% market share, although they Do we need to look deeper into what other/similar types of food are
would break even at only 10% present at Midway and where they are located?
Increase in costs or Midway Airport royalty payment

Next Steps

Conduct market assessment to determine feasibility of assumptions and

better understand competitive landscape
Advertising branding opportunities for Burger Palace’s other locations
will opening this location help the other locations?
Potential to charge higher prices: often chains charge higher prices at their
airport locations to compensate for their royalty fees to the airport. Is
there room for Burger Palace to raise prices?

126
 Quant Level – HEAVY

Case #4: Chicken Pox Vaccine (1/6) Case Type Industry Client Type

Pharmaceutical / Pharma
Market sizing
UNDISCLOSED – Round 1 – Candidate Driven Healthcare Manufacturer

Fit Questions Interviewer Guidance

1. Walk me through your resume. This case contains a lot of information to be given. Let the interviewee know we are only
2. Why X Firm? (specify a Firm of interviewer choosing) concerned with the US market. The candidate should ask questions on the vaccine (dosage,
frequency, etc.). The key will be to identify that once the current population is vaccinated, the
revenues will drop as the volume would only correspond to incremental population growth.

Fit Evaluation
Overall Fit Performance
S1 O1 A1 R1
2 2 2 2

Case Prompt Case Development

Your client is a large pharmaceutical drug company working on a vaccine for chicken pox. The vaccine needs to pass 1. Framework
three phases of testing to be approved by the FDA. It has just completed the second phase, and the client is asking for 2. Market sizing - volume
your help to decide if they should fund the third phase. The third phase would last 2 years and cost $300M. Results 3. Pricing the product
from previous phases indicate the vaccine has a 95% chance of approval. We would be able to start producing vaccine 4. Cost-benefit analysis and
immediately following approval. discussion
5. Recommendation
Should our client invest or not?
Case Evaluation
Structure and Framework

Analytical and Problem Solving Ability

Communication and Positive Attitude

Synthesis and Recommendation

127
Case #4: Chicken Pox Vaccine (2/6)
Framework Interviewer Guidance
Working hypothesis: The client should invest in the vaccine. The below information should be provided only when candidate asks:
Vaccine is a one time pill.
Pharma Market Assume US population is 300M, and it is uniformly distributed from 0-75
Customer Segments (as many people enter population as leave every year).
Likely children, potentially includes some adults
It is estimated that it would take 3 years to vaccinate existing population,
Competition / Substitutes and would be done at an even pace.
Size / Growth Rate
Channels Interviewee should begin by sizing the US market.
Providers, pharmacy clinics
If interviewee has not asked about the portion of population that would need
Profitability vaccine, then push him or her to go in that direction.
Revenue
Price per treatment When asked what portion of population would need vaccine, Show only
Volume - number of treatments needed (current pop.) Exhibit 1, cover Exhibit 2.
Future vol once current population is vaccinated Candidate should be pushed to conclude that the portion of the
Costs population needing the vaccine is that with an infection rate of less than
Fixed costs 50%.
» Plant capacity
» R&D costs
» Investment / BE timeline
Variable costs
» SG&A
» Inputs for production, labor
“Discounting Cost do we need to discount these free cash flows
(FCF)?

Pharma Company
Fit with existing products, i.e. other vaccines or childhood focused
therapies?
Opportunity cost - could this money be spent elsewhere?

128
Case #4: Chicken Pox Vaccine (3/6)
Exhibit 1 Exhibit 2

129
Case #4: Chicken Pox Vaccine (4/6)
Market Sizing: Volume Interviewer Guidance
Candidate should begin by sizing the population that can be treated by this drug, which Probe interviewee to recognize that population with < 50% chance of
can be viewed in two parts: existing population when vaccine is released and people that infection can be considered as “not infected .
will be born every year. Population that is already infected (>50% infection) should not be treated
first vaccination doesn’t work for them.
Insights from Exhibit # 1
By age 18, 100% of the population has been exposed to chicken pox and thus does Candidate can also use 320M for the US population and assume even
not need the vaccine. distribution of population from 0 to 80 years.
300M/75 = 4M people of each age; 4M*18 = 72M people ages 0-18 Each age range would still have 4 M people.
Since only those who haven’t been infected would need the vaccine, we should Infection assumptions remain the same regardless of initial population
vaccinate ages 0 9, 50% of the 0-18 population. This is used as a cut off point since
size and age range used.
population is evenly distributed, those younger than 9 have >50% chance of not
having been infected and those older than 9 has <50% chance of not having been
infected.
72M x 50% = 36M in addressable market

Pricing the Product

When asked about price, show Exhibit 2. Provide the following only when asked:
Client should price at $30. While an argument could be made for a lower Costs (per pill):
price point, the inflection point at $30 and low price elasticity below $30 Distribution $1.50
suggests it is the right price point. Production $2.50
There is a slight decline between $25 and $30 that will lose a small
population for $5 more per unit over total populace, but slope of demand SG&A $5.00
gets considerably steeper after $30. Assume the $300M costs for phase three includes everything else (plant
At $30, notice that only 75% of the market is approachable for vaccination. set up costs, etc.) and can be expensed evenly over the 2 years of testing.

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Case #4: Chicken Pox Vaccine (5/6)
Cost-Benefit Calculation Key Takeaways
Net target population for vaccination is: Good candidate:
Population (age 0-18) * (% not infected) * (% willing to pay) Profitability during first 3 years is $756M, annuity profit is $63M from year
72 M * 50% * 75% = 27M 6 onwards.
9M treated per year based on the assumption it takes 3 years to
vaccinate existing population. Breakeven in ~1.25 years.

Stronger candidate:
In addition, there are 4M babies being born each year (as population is
Pharma companies usually have rather high hurdle rates (or discount rates)
steady state), with parent willingness to pay staying constant at $30.
due to the risky nature of their business model, but any reasonable rate
Thus, 4M*75% = 3M vaccinations per year.
will yield a high positive NPV.
Candidate does not need to calculate NPV just recognize high positive value.
Total costs per pill are $9 (see prev. page) and thus, the contribution
margin is $21/pill. Interviewee should also mention the percentage chance of failure (for
example 5%) and discuss how that could affect the calculation (there are a
An example of math structure to calculate net profit for three years after couple correct ways to interpret the effect).
vaccine approval is shown below. Note that a strong candidate will use the
contribution margin to calculation net profit for each of these three years
and compare the total profit to the initial 300M investment.

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Case #4: Chicken Pox Vaccine (6/6)
Brainstorm Suggested Response
Do we need to be worried about any new entrants? We do not need to worry about potential new entrants.
Since there is a natural three year protection due to required FDA testing, other companies
Note: Many interviewees will blindly say yes. If this occurs, provide the would not be able to capture the “existing population segment of the market. Assuming they
information in the first bullet below. This should prompt the candidate to ask do enter in year 6, we would be sharing only 3M vaccines per year. Even assuming they were
about the rest of the data. able to capture a decent portion of the market, they wouldn’t be able to cover the upfront
testing costs for years.
This information is only to be provided when asked: With 50% of market and holding price constant (which is itself unrealistic), competition
Vaccine will not be patented. gets only $31.5M, and breakeven time is ~10 years.
Other companies would have to undergo same series of testing and no Under more likely scenario where price is reduced in half to $15, competition only gets
other companies have started formal testing of vaccine. $9M if they get 50% of market, and breakeven time on phase 3 alone is ~33 years.
Phase 1 and 2 combined take 3 years (we have 3 years of competitive Calculation: ($15-$9)*3M*50% = $9M.
protection); Phase 1 and 2 cost $200M. Costs for phase 1 and 2 should not be used when calculating go/no go since they are
sunk, but should be considered when evaluating competitors’ decision.
Competitors do not have much incentive to follow us into this market making our position
even stronger.

Recommendation Risks and Next Steps

Client should invest in the chicken pox vaccine Risks
Breakeven in 1.25 years, profitability during first 3 years is $756M, Risk of potential new entrants
annuity profit is $63M Pharmaceuticals usually have high hurdle rates, and, given that we will
Charge $30 per pill, gross margin of $21 (70%) have 3 years protection from FDA process and will corner the existing
Target ages 0-9; 75% of parents willing to pay at this price point market, it will take several years for competitors to breakeven; therefore,
competitors have no real incentive to enter, even for generics

Next Steps
Develop a roll-out / implementation plan for the investment
Including channel strategy and any fit with existing products from client

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 Quant Level - MEDIUM

Case #5: Cleaning Products (1/5) Case Type Industry Client Type

Growth Strategy Consumer Products Manufacturer

McKINSEY & CO – Round 2 – Interviewer Driven

Fit Questions Interviewer Guidance

1. What is the biggest challenge you faced at your last job This is a short case designed to test a candidate’s ability to interpret simple information and
and how did you navigate it? think creatively. The recommendation is fairly straightforward, and most candidates will arrive
2. What is your leadership style? Tell me about a time at the same conclusion. The interviewer should take note of the candidate’s delivery. Strong
when you effectively led a team by leveraging this candidates will anticipate the interviewer’s next question and drive the discussion forward. The
leadership style. best candidates will flesh out this basic case with out-of-the-box thinking and creative
recommendations.

Fit Evaluation
Overall Fit Performance
S1 O1 A1 R1
2 2 2 2

Case Prompt Case Development

Our client is a prominent manufacturer of household cleaning products such as soap. They feel that an opportunity 1. Framework
exists for them to do better in the market. What will be some of the first things that you will ask the client? 2. Structured Brainstorming /
Q&A
3. Final Recommendation
Interviewer Guidance
Drive the candidate to ask what is meant by “doing better in the market before writing out a full framework. If the
candidate doesn’t bring it up, guide the discussion in that direction. Possible replies by candidate may include stronger
Case Evaluation
growth, more market share, more profitable, etc.
Structure and Framework

Analytical and Problem Solving Ability

Communication and Positive Attitude

Synthesis and Recommendation

133
Case #5: Cleaning Products (2/5)
Framework Guidance
Interviewer
A simple internal/external factors framework is effective here, but any Once candidate presents the framework, ask:
number of frameworks could work well. The framework below is illustrative What questions will you ask our client to help you get the information you
of a backbone that ought to be fleshed out in greater detail. need?

Internal: Only provide the following if asked. If not, drive the candidate towards the
Revenues information:
Price (relative and absolute) / price elasticity Revenues in the last year were $3 billion.
Quantity, product mix, channel mix (grocery vs low cost (e.g. Costco)) The client’s product mix includes dish washing powder, clothing detergent
Expenses powder, hand wash liquid, shower gel, and all-purpose soap.
Fixed costs (PP&E, SG&A, advertising, etc.) There are no opportunities in cost savings or by adding new products to
Variable costs (labor at factories, raw material such as plastic, shipping, the mix.
etc.)
External
Market (growth, percent share)
Competition (new entrants, differentiation, price)
Customers (preference, trend toward environmentally friendly products) Case Development

After presenting the framework and learning the information in the section
Transition Statement: I would like to begin by better understanding client above, a strong candidate will conclude the following:
revenues, and then I would like to examine their product mix. First, do we know
It appears that the only way to increase profitability is to improve
client sales last year?
revenues.
Possible ways to do this include increasing sales volumes or altering
prices.
The firm can increase volumes by either grabbing more market share or
growing the total available market.

A strong candidate might ask a number of questions at this point, but guide
the discussion towards price elasticity. Show Exhibit 1 on the following
page.

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Case #5: Cleaning Products (3/5)
Exhibit 1: Price Elasticity
Based on your ideas, you conducted a market research study. Your research has shown that if the prices of the client’s products are changed all at once in the
percentages shown, the volumes of the products sold will remain unchanged. Note that changes in price either all happen at the same time or none of the
changes are made at all (i.e., they will either change all the prices below or none of them).

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Case #5: Cleaning Products (4/5)
Interviewer Guidance
Allow the candidate to talk through their insights from Exhibit 1. A strong candidate will understand they have enough information to calculate the new revenues
associated with the price change and drive the discussion forward. Either way, ask the following question:

The client has told us that they will be happy with a 1% increase in revenues. Should they go ahead with the price change?

The candidate should calculate current revenue and revenue after price change from table (i.e. the candidate should come up with the two rightmost columns in
the table below). Strong candidates will recall from earlier in the case that total current revenue is 3 billion dollars.

Based on these calculations, revenues will be $3.039 billion after the price change representing an increase of $39 million. The client’s target was million
revenue change), so they should go ahead with the price change.
A strong candidate will recognize that they can calculate the overall change in revenue by summing the difference in revenue by product to arrive at the $39M
increase in revenue.

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Case #5: Cleaning Products (5/5)
Brainstorm Recommendation
Ask the candidate: is there anything that our client should watch out for? Recommendation
Sample responses may include: Go ahead with the price change
Competitor’s moves may undermine our price changes. Revenue will increase by $39M, which is higher than the goal of a 1%
Are we a monopoly producer? If so, we may invite anti-trust suits by increase
price increases. Given price changes will not cause a decrease in volume of the products
There is a risk that the research was not reflective of all the geographies sold
to which our client supplies its products.
Risks
This is a one-time increase in revenues. The client cannot expect to
Research may not have been fully reflective of client’s geographic
continue raising prices to keep a steady top-line growth.
demographic market
We have only analyzed revenues. There may be some additional costs
Research is based on the status quo if competitors use the opportunity to
associated with price increases (i.e. advertising to explain price increase)
lower prices, we may lose customers and revenue
that may eat into profits generated through the $39M additional
Research only considered one change option; there may be more optimal
revenue.
price changes that could be made

If the candidate stops after two or three ideas, probe them by asking “what
Next steps
else? to come up with at least four or five ideas before proceeding to
Pilot the recommendation in one market to confirm the results from the
developing a final recommendation. This should be an opportunity for the
market research
candidate to demonstrate structured thinking.
Explore other potential channels to grow revenue organically (e.g., online)
and consider expanding marketing and sales effort to improve market
share in profitable products
Cost cutting diagnostic could be done to see if there are other avenues to
improve the bottom line

137
 Quant Level – HEAVY

Case #6: Coffee and Tea Apparel (1/7) Case Type Industry Client Type

M&A Analysis Retail & Apparel Clothing Retailer

DELOITTE – Round 1 – Interviewer Driven

Fit Questions Interviewer Guidance

1. What has been your most significant professional There are several questions which will be outlined in this case. You should provide the below
accomplishment? information as background and distribute a copy of the data sheet on the next page for the
2. Tell me about a weakness. candidate’s reference throughout the case.

Fit Evaluation
Overall Fit Performance
S1 O1 A1 R1
2 2 2 2

Case Prompt Case Development

Deloitte has been asked to help the client, Coffee, evaluate a hold or sell decision. Coffee is a large multinational women's 1. Background discussion
clothing retailer with worldwide revenues of over $3B in 2016. They sell sports, formal and casual apparel. The company as a
2. Data sheet discussion
whole has been performing strongly and has emerged out of the financial crisis with strong sales growth and many investment
opportunities. Despite the company’s strong performance overall, its American operation has an underperforming brand that 3. Questions 1-5
they have put up for review. The firm has also closed some of the brand’s associated stores. 4. Recommendation
The American operation has two major brands: a formal wear brand bearing the same name as the company, “Coffee, and a
casual wear brand named “Tea. The brands are sold through the following channels: Case Evaluation
Coffee branded retail stores: $200M in annual revenues Structure and Framework
Tea branded retail stores: $20M in annual revenues
Coffee branded outlet stores: $150M in annual revenues Analytical and Problem Solving Ability
Wholesale sales to major retail chains e.g., Macy’s : M in annual revenues
Communication and Positive Attitude
The Tea brand has historically been neglected because management has focused its resources on the core business the Coffee
brand. Nonetheless, the Tea brand has consistently put up a profit with minimal management attention and capital
reinvestment. Essentially, Coffee wishes to understand whether they are better served by divesting the Tea brand and Synthesis and Recommendation
refocusing their attention on their core Coffee brand business or holding the Tea business and simply “milking the cash cow.

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Case #6: Coffee and Tea Apparel (2/7)
Data Sheet

Management has decided that the terms of the sale will be as follows:
Sale of Tea brand will include only Tea’s branded product sales in Tea’s retail channel and Tea’s wholesale business
Buyer will not have access to Coffee’s Outlet stores or Coffee branded retail stores for distribution

Brand vs. Channel Sales CY2016 Revenue Multiples: Consumer Product

Transactions in the U.S.

Coffee Coffee
Tea branded Revenue Deal size
($M) branded branded Wholesale Deal date
retail stores
retail stores
outlets
multiple ($M)
Coffee Transaction A
Brand
0.6 147 January 2016
180 10 120 540
products Transaction B 0.7 300 March 2016
Tea Brand
products
20 10 30 60 Transaction C 0.9 180 April 2015
Transaction D 0.6 70 October 2015
Note: Sales in the Wholesale channel are expected to remain
Transaction E 1.9 5 November 2012
unchanged in CY2017

Number of Retail Tea Brand Business Historical

Stores Performance

(% of sales) 2014 2015 2016

Start of 2015 Start of 2016 Start of 2017 Revenues 100% 100% 100%
Coffee
branded 100 125 150 Gross Profit 23% 23% 22%
stores
Tea
EBIT 12% 11% 10%
branded 45 32 20 SG&A 5% 6% 6%
stores
COGS 77% 77% 78%
Note: All store closings and openings occur at the start of the
calendar year. Number of outlet stores remains constant
Note: Contains all sales of Tea Brand Products

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Case #6: Coffee and Tea Apparel (3/7)
Framework Interviewer Guidance
Working hypothesis: Coffee should hold the Tea brand. The following Strong candidates should focus on revenue generation for the two options
considerations will be used to test whether this hypothesis holds true. (holding Tea or divesting), but they should not forget to look into other
success metrics such as:
Market
Channels: retail, outlet, wholesale Customer perception and loyalty
Customer preference: coffee v. tea Brand development
Competitor response Benefits from holding / selling Tea
Ability to remain competitive if only in coffee market Risks associate with holding / selling Tea

Projected Revenues
Holding Tea:
By channel for Coffee & Tea products
# Stores by channel
Breakeven (if hold, when is cash flow equivalent to sale of Tea?)
Divesting Tea
Projected valuation
Premium on purchase for buyer (own synergies, ability to fill Tea
stores with their own products)
Buyer may view scenario differently and want to negotiate
purchase price
Ability to fill Coffee stores with higher revenue products that from
Tea

Risks
Holding Tea: may no longer be ‘cash cow’ over time
Loss of diversification / synergies from divestiture
Impact on Coffee brand loyalty over time
Potential sourcing issues if reliant only on coffee beans as raw
material
Tariffs on coffee / tea imports and associated revenue impact

140
Case #6: Coffee and Tea Apparel (4/7)
Question 1 Calculations / Insights
Provide the below questions to the candidate: Question #1A:
Candidate should do the following:
Question #1A: 1. Isolate the revenues of the part of the business being put up for sale Tea’s
Using the terms of the sale from the data sheet, find the associated revenues retail Tea’s wholesale .
for 2017 that the buyer would receive from buying Tea? 2. Project the Tea’s retail revenues by using proportional change of stores
from 2016 to 2017.
Interviewer can mention that the terms of the sale are available on the 3. Tea’s wholesale revenues will not change from to .
data sheet given their importance.
Revenue ($M) Coffee branded Tea branded retail Coffee branded
Wholesale
Question #1B: retail stores stores outlets
Using the terms of the sale from the data sheet, find the associated 2017 Coffee Brand
180 10 120 540
products
revenue that Coffee could maintain by not selling Tea?
Tea Brand
20 10 30 60
products
Fraction of 2016
- 20/32 = 0.625 - 1 (no change)
stores in 2017
2017 revenues 10*0.625 = 6.25 60

Total Revenue = $66.25

Question #1B:
Candidate should do a similar analysis as below:

Coffee branded Tea branded retail Coffee branded

Revenue ($M) Wholesale
retail stores stores outlets
Coffee Brand
180 10 120 540
products
Tea Brand
20 10 30 60
products
Fraction of 2016
150/125 = 1.2 20/32 = 0.625 1 1 (no change)
stores in 2017

2017 revenues 1.2*20 = 24 10*0.625 = 6.25 30 60

Total Revenues = $66.25M (see Q 1A above) + $24M (1.2 * $20M from
Coffee retail) + $30M (from Coffee outlet) = $120.25M

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Case #6: Coffee and Tea Apparel (5/7)
Question 2 Potential Response
How would you value the sale scenario and hold scenario? Please use Candidate should determine a revenue multiple from the data sheet.
available data to support your argument.
Good Answer:
Average of all deal multiples is ~0.9.
Sale = $66.25M * 0.9 = ~$60M
Hold = $120.25M * 0.9 = ~$108M

Better Answer:
Remove Transaction E as it is dated and reflects inflated pre-crash asset
prices. Doing this yields an average deal multiple of ~0.7.
Sale = $66.25M * 0.7 = ~$46M
Hold = $120.25M x*0.7 = ~$84M

Additional Thoughts in a Great Answer:

Sell Scenario:
Buyer may have existing channels that can satisfy the demand; or buyer
can build channels from scratch.
Interviewer Guidance Buyer is also purchasing the remaining store leases as part of its purchase
Push the candidate to perform the below steps: price, so ability to fill up space in Tea stores currently filled by Coffee
1. Take revenues calculated from previous question. branded products may also attract a slight premium.
2. Refine revenue multiple to adjust for outliers and dated information. Coffee’s ability to replace the lost revenue streams associated with the
3. Apply revenue multiples to value the two scenarios. sale will improve the attractiveness of the sell scenario but should be
wary of the buyer seeking a discount for having to replace the lost
revenue where Coffee products were sold.
The buyer can capture some of the existing demand for the Tea brand
currently satisfied through Coffee branded retail stores and Coffee
branded outlets (i.e., a portion of each of the $20M and the $30M.

Hold Scenario:
Candidate can compare Coffee’s return on investment to Tea’s to
determine if there is any merit in investing money into Tea to turn it
around.

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Case #6: Coffee and Tea Apparel (6/7)
Question 3 Response to Question 3
If Coffee decides to hold the Tea brand, how long will it take for the cash flow Good Answer:
from Tea to equal the amount of money that Coffee would have received Using $120.25M of revenue from question 1B, candidate can use the 10% EBIT
through selling Tea? margin to get close to cash flow.
10% * 120.25M = ~$12M per year
Note: Candidate should use $50M as the sales price in the calculation, ignore
Therefore, breakeven = $50M/$12M or ~4 years.
time value of money.
Better Answer:
If asked, tell the candidate to assume no depreciation / amortization or Candidate should realize that EBIT is not the true cash flow and should take taxes
changes in working capital. (So, we would make cash flow equal to EBIT minus out.
taxes.) Assuming 40% tax rate, net earnings % would be 6% (10% * 0.6).
6% * 120.25 = $7.2M per year

Therefore, breakeven = $50M/$7.2M or about 7 years.

Question 4 Response to Question 4

Based on your analysis, what would you recommend Coffee do? The candidate should compare the value of the sale scenario (~$46M) to the hold
scenario (~84M) refer to Question 2.

Based on the analysis, the conclusion should be to hold onto the Tea brand. The
candidate should at minimum recommend that Coffee pursue the scenario with
the higher valuation.

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Case #6: Coffee and Tea Apparel (7/7)
Recommendation Interviewer Guidance
If candidate chooses to hold Tea, the candidate should mention: Arguments can be made to substantiate either sell or hold, but make sure that
Hold value to Coffee exceeds the sell case reasons are given for what the candidate chooses.
There may be an opportunity to improve the performance of Tea that may
require extra investment: open more Tea retail stores, enterprise cost A good answer will be logically structured to address various business
reduction program, take brand international, take brand to a broader range considerations including:
of potential wholesale clients (e.g. independent retailers)
Overall business strategy for women's apparel: Does Tea’s brand, product mix,
If candidate chooses to sell Tea, the candidate should mention: and styling fit within the overall strategy of Coffee’s vision? This is potentially an
Some revenue streams from Tea branded goods are likely to be readily overriding factor in the decision to buy or hold the business.
replaced by Coffee’s operations
Allows Coffee to gain as much as possible for the Tea retail business before it Ability to Change: In a hold scenario, does Coffee have the appetite to fully
loses more value implement the changes required to halt the slide of Tea?
Mention the fact that as long as the trend continues to close the Tea stores,
the valuation for Tea may go down Impact to Remaining Revenue Streams: Candidate should explore the impact
that a divested business unit will have on the portions of the business that
remain.
Risks and Next Steps
Hold: Potential Buyers: Who are the prospective buyers for the business, and what
Risks are the potential issues with making a deal with each one?
Holding Tea could allow the retail business to continue to leak value. The combined effects of Private Equity: Potential carve out experience, but unlikely to overpay for
store closures and steady decline in EBIT margin (12% in 2014 to 10% in 2016) has resulted in a
significant reduction in Tea’s retail profits. The bulk of Tea’s value increasingly lies with the asset. If they do not have other similar businesses in their portfolio, will need
wholesale business. to set up their own back office functions.
Next Steps
Strategic buyer: May take brand up or down market; an existing retail buyer
Coffee needs to assess whether this declining trend in the Tea retail outlets will
continue and determine if that is potentially harmful to the overall business. may want to close the rest of the Tea retail stores; lack of back office will
Sell: make it difficult for some buyers to do a “bolt-on business.
Risks
Loss of opportunity related to the hold scenario revenues Transaction Costs: Banker costs and potential loss of management focus on the
Buyer may try to negotiate a discount for having to replace lost revenue for where Coffee core business during deal will make sale scenario less attractive.
products were sold
Next Steps
Determine extra investment needed to hold and improve Tea and determine if there is any Stranded Costs: There may be services across the two brands that are shared
scenario where the hold value of Coffee still exceeds the sell case including additional and may be stranded upon sale.
investment
Determine sell terms suitable for Coffee that do not include discounting the sale value of Tea

144
 Quant Level – MEDIUM

Case #7: Commercial Vehicle OEM in China (1/5) Case Type Industry Client Type

Transportation &
Growth Strategy Manufacturer
STRATEGY& – Round 1 – Candidate Driven Automotive

Fit Questions Interviewer Guidance

1. What can you contribute to our consulting team? A key assumption to this case is that profitability will result from growth - the critical question
2. Why did you choose this geographic location? is how to increase share.

There are two dimensions:

Qualitative discussion (10 - 15 min)
Why did Megatron originally believe it could be successful in China?
Why has Megatron struggled in China?
Fit Evaluation Quantitative calculation (10 - 15 min)
Overall Fit Performance Should Megatron proceed with the capital investment?
S1 O1 A1 R1
2 2 2 2 What are the risks to each decision?
Case Prompt Case Development
Our client is Matthew Stafford, CEO of Megatron International, a global commercial vehicle OEM. 1. Framework
The company is successful and has strong positions in “mature markets - i.e., North America and Western Europe. 2. Qualitative brainstorming
Nonetheless, while it entered China five years ago, it has struggled to grow there. This is particularly troubling since 3. Quantitative analysis
China has become the world’s largest market and now represents of global demand by volume.
4. Recommendations
We have been tasked to help Stafford and Megatron profitably increase its share position in China.
Case Evaluation
Structure and Framework

Analytical and Problem Solving Ability

Communication and Positive Attitude

Synthesis and Recommendation

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Case #7: Commercial Vehicle OEM in China (2/5)
Framework Interviewer Guidance
OEM Market in China Strong candidates should focus on market considerations, profitability of the
Growth and size of market client, and the client’s overall capabilities and risks it has as a company in the
Customer: Chinese OEM market.
Preferences quality considerations; price-sensitivity; ability to pay for
vehicle
If candidates do not consider the company’s capabilities, push them to do so
Competitors:
before continuing with the case.
Product differentiators; fragmented or concentrated mkt.
Geographic location
Profitability
Revenue:
Price of vehicles manufactured, # sold, by region
Product mix
Costs
FC: PPE, initial investments-recouped?
VC: labor, per vehicle mfg., distribution, salesforce
Company
Capabilities
Scale in manufacturing, low-cost, global
Excellent product quality, brand reputation
Risks
Entering unfamiliar emerging market
Lack of parts / service availability / dist. Network for regions

Transition statement: I would like to consider Megatron’s positioning in

China along each of these three parameters to better understand their
current abilities relative to that of their competitors.

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Case #7: Commercial Vehicle OEM in China (3/5)
Question: China Entry Interviewer Guidance: China Entry
As we mentioned, Megatron is an established and successful player in There is no data to support the question - the interviewee is merely to provide
North American and Western European markets. hypotheses. A strong response would draw out the various steps of the value chain
and then comment on whether or not such capabilities could be transferred to
Looking back at the decision to enter China five years ago: China; for example:
What capabilities did Megatron assume it could bring to bear as it Strong product development capabilities
expanded into China? Or, put another way, what advantages that helped Scale in manufacturing
drive its success in mature markets would have been most applicable as it Low-cost and global manufacturing footprint and supply chain (it currently
supplies two regions)
expanded into emerging regions?
Excellent product quality and reliability
Strong brand / marketing and sales capabilities
Push the candidate to go beyond their initial thoughts from their
Global management team
framework by asking, “what else?”, as the candidate walks you through
their ideas.

Question: Capabilities Interviewer Guidance: Capabilities

Despite these advantages, Megatron has clearly struggled to increase its Again, there is no data - the candidate is asked to develop hypotheses. A strong
presence in China. response must mention lack of local market knowledge - i.e., unfamiliarly with new
competitors, customer needs, buying criteria, product requirements, etc.
What capabilities do you think it lacks? What factors have likely
contributed to its difficulties? Additional factors that may be mentioned include:
- Inadequate dealership network
- Lack of parts / service availability
- Over-engineered product
- Lack of regional scale

Note: Candidate may mention concerns around government involvement in market

/ need to find local JV partner: while these are very valid concerns, they are not the
focus of this example.

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Case #7: Commercial Vehicle OEM in China (4/5)
Interview
Case Development
Guidance
At this point, the interviewer will direct the candidate to explore in greater Breakeven Calculation
depth the issue of “lack of local market knowledge . The interviewer should share the following information with the candidate
only upon request.
The Chinese commercial vehicle market is dominated by domestic firms,
Total size of global market: 500K units
which control 90% of volume (five major players - top domestic OEM controls Price of Ndamukung vehicle: $50K per unit
20%). COGS of Ndamukung vehicle: 75% of price
These competitors have adopted a completely different strategy: SG&A: $10K per unit
While Megatron trucks are built to last for twenty years, Chinese entries Stafford and Megatron would require a break-even period of 4 years.
For ease of calculation, the Chinese truck market is not expected to grow
are far less durable - lasting for, at most, 4 years.
over the next five years.
Nonetheless, these trucks are far less expensive - priced at ¼ the amount
of Megatron’s. The key calculation is to determine the market share required to breakeven
This value proposition plays well to Chinese customers, for whom price on the investment within the four-year time frame.
and payback period are critical considerations.
In attaining market leadership, Megatron is considering introducing a new
brand - Ndamukung Inc. - with products specifically built for the Chinese Breakeven Calculation
market.
These products would be priced similarly to those of the competition, with Size of Chinese market = 500K x 80% = 400K units
Variable margin per vehicle = $50K - (75% * 50K) - 10K = $2.5K
equivalent performance / cost trade-offs.
Vehicle sales required to breakeven = $500M / $2.5K = 200,000 units
We are to advise Stafford and Megatron on whether or not to invest in
Vehicle sales per year required to breakeven = 200,000 units / 4 years =
Ndamukung. 50,000 units
To simplify, the required investment would consist of a $500M facility / Market share required = 50,000 / 400,000 = 12.5%
supply base / distribution network to produce Ndamukung-branded Candidates could also perform additional calculations:
commercial vehicles. Calculate additional profit potential - each 1% share delivers $10M in
variable margin.
Describe share as percent of domestically-controlled market (14% = 50K /
360K annual units), as this is the most applicable segment for Ndamukung
products.

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Case #7: Commercial Vehicle OEM in China (5/5)
Recommendation Risks and Next Steps
Either go or no go for the investment is acceptable. Risks Proceeding
Failure to obtain required share due to competitive pressure / inability to
Recommendation distinguish Ndamukung offering in the market
Megatron should proceed with its investment in the Chinese commercial Dilution of Megatron brand / confusion over brand promises (i.e.,
vehicles market and strive to achieve at least a breakeven market share of customers expect Megatron quality from Ndamukung product)
12.5% Megatron may lack the capabilities to engineer to “good enough
This must be achieved by adapting to local preferences while maintaining a standards
level of differentiation compared to domestic OEMs. Only then would it be
capable of reaching the market share required to be profitable. Ignoring Next Steps Proceeding
the largest commercial vehicle market would be terribly prohibitive for Competitor analysis to assess feasibility of and ways in which to achieve
future growth. the 12.5% market share
Customer insights study on brand image
Explore partnership with local organizations to enhance local market
knowledge and to identify potential 3rd-party manufacturers to help
produce vehicle at “good enough standards
Evaluation
Strong recommendations will pick a firm position and provide back-up using Risks Not Proceeding
qualitative and quantitative analyses previously conducted as supporting Omission from world’s largest commercial vehicle market and cession of
evidence. global scale to Chinese OEMs
Failure to develop manufacturing / design capabilities with which to serve
other emerging markets

Next Steps Not Proceeding

Re-focus efforts on other emerging markets and determine if opportunity
exists to enter a smaller market and be biggest player
Create prioritization plan for internal growth of capabilities that best align
with customer needs in emerging markets of interest

149
 Quant Level – MEDIUM

Case #8: Consumer Products Strategy (1/6) Case Type Industry Client Type

Market Entry Consumer Products Manufacturing

BCG – Round 1 – Candidate Driven

Fit Questions Interviewer Guidance

1. What kind of a leader are you? This case features a combination of quantitative analysis and brainstorming. A strong candidate
2. Tell me about a time when someone on your team will cater their approach, framework, and brainstorming to the specific situation at hand
challenged you. focusing on low income consumers as opposed to treating it as a generic consumer goods
growth case.

Fit Evaluation
Overall Fit Performance
S1 O1 A1 R1
2 2 2 2

Case Prompt Case Development

Our client is a large, multinational consumer products company with business in over 200 countries. Today, we are 1. Framework
going to focus on its US business. It has been following US demographic trends and has found that low income
households have been growing two times as quickly as other consumer segments. Low income is defined as families 2. Quantitative analysis
with income at the poverty level or below. 3. Brainstorming

Our client has always had a premium product strategy. It sells its products in grocery stores,
4. Recommendations
convenience stores, mass retailers, etc., but its products are always priced at the high-end of their respective
Case Evaluation
categories. It has never targeted the low income segment before and doesn't have a strategy to do so, but, given the
Structure and Framework
growth of this segment, our client is considering entering the low income segment.
Analytical and Problem Solving Ability
Our client has 3 questions for BCG:
1) Should it have a low income strategy?
Communication and Positive Attitude
2) If it should have a low income strategy, what are some tactics it should deploy?
3) What are some of the risks the client may face?
Synthesis and Recommendation

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Case #8: Consumer Products Strategy (2/6)
Framework Guidance
Interviewer
Market Information to be provided upon request:
Low income consumers Low income consumers purchase largely in smaller, local shops.
Demographics (who is buying? age, gender, socioeconomic status) Low income consumers can’t afford salons but will indulge on shampoos.
Price sensitivity Low income consumers are willing to spend more on baby food to protect
Product preferences (brand v. generic) their children.
Channel selection for these consumers (neighborhood store) There are valid generics that compete with our client’s cold medicine.
Competitors
Low-cost producers (Walmart, Costco, Dollar store) The framework should include:
Segment growth, size The framework should be catered to the case, i.e. consumer goods strategy
in the low income market. There are issues specific to this population. A
Profitability strong framework would not be reusable in a generic consumer goods case.
Revenue A market examination including consumer preferences.
Price of product by category: high WTP for select products (e.g. shampoo, A revenue or profitability analysis.
baby food) A consideration of the risks associated with the candidate’s strategy.
Volume sold for lower-priced products
Costs
FC: manufacturing setup costs, initial investment to enter new channels Case Development
VC: per unit costs, labor, distribution, salesforce, marketing for new
products When the candidate asks about products, show Exhibit 1.

Consumer Products Company

Capabilities to add new product strategy Then ask:
Risks: The client has shared some data for its key products. What do you make of
Consumer loyalty to competitors this information?
Access to our products: arrival to store by transportation methods (e.g.
car, bus, train), geographic location of storefronts in cities
After discussion of Exhibit 1, ask:
Transition statement: I would first like to begin by analyzing revenue for some If the client achieved its fair share of the low income segment, how much
of the client’s products, such as food and medicine, and then analyze low
income consumers’ spend by these different product categories. Do we have additional revenue would it generate?
any similar data?

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Case #8: Consumer Products Strategy (3/6)
Exhibit 1

Consumer Spend by Product Category

Total category sales Client category sales Total LI consumer spend LI Consumer spend on
Product/ category (US$M) (US$M) on category (US$M) client (US$M)

Shampoo 400 100 90 30

Cold Medicine 250 50 75 7.5

Diapers 300 150 100 25

Baby food 300 100 100 30

LI: Low Income

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Case #8: Consumer Products Strategy (4/6)
Calculations
Case Development
1. Calculate the overall share and share of low income consumers by After market share and revenue analysis from Exhibit 1, share that the client
product/category. is not interested in the cold medicine category. However, the client has done
customer research that suggests low income consumers are interested in
buying diapers (show Exhibit 2).
Client share of
Product/ Client overall low income Overall share vs Ask the candidate:
category market share consumers low income share What do you see that could help us figure out why low income consumers
Shampoo 100/400 = 25% 30/90 = 33% Overall < LI aren’t buying our client’s diapers?
Cold Medicine 50/250 = 20% 7.5/75 = 10% Overall > LI
After Discussion:
Diapers 150/300 = 50% 25/100 = 25% Overall > LI What else should our client think about as it develops low income strategy?
Baby food 100/300 = 33% 30/100 = 30% Overall = LI What are the risks?

1. Calculate incremental revenue for cold medicine and diapers

Sample Response
Cold medicine: (20% - 10%) x $75M = $7.5M
Diapers: (50% - 25%) x $100M = $25M Product
Total incremental revenue: $7.5M + $25M = $32.5M Reduce package size of diapers: our client’s package size is significantly
larger than its competitors. The client should keep the price / diaper the
same; but, if the client dropped the package size from 40 pack to 20 pack,
it would cut the absolute price of the box to $10, even lower than its
competitors.
Develop discount brand to sell more affordable goods.
Customer
Enter smaller, local shops.
Market specifically to low income consumers.
Company
Capitalize on existing strengths, such as baby food and shampoo.

Note: Brainstorming should be conducted by categories.

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Case #8: Consumer Products Strategy (5/6)
Exhibit 2

Product Packaging and Price by Category

Average package Average price of

Product/ Client package
size of Client price top 5
category size
competitors competitors

Shampoo 10 oz bottle 12 oz bottle $4 $3

Cold Medicine 6 oz bottle 6.5 oz bottle $6 $3

Diapers 40-pack 32 pack $20 $16

Baby food 6 oz jar 6 oz jar $2 $1.50

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Case #8: Consumer Products Strategy (6/6)
Recommendation Risks and Next Steps
The client should pursue a low income strategy by: Risks
Focusing on diapers, this could generate an additional $25M in revenue Brand dilution and cannibalization
Increase sales by retaining its price / diaper but reduce package size from Increased packaging and distribution costs by targeting low income
40 to 20 diapers per box to achieve a lower absolute price of $10/box consumers
Competitive response, such as a price war

Next Steps
Study on effect of the strategy on our brand and existing customers’
purchasing behavior
Re-negotiate supplier packaging contracts to lock in lower prices and
research 3rd party vendors to potentially outsource distribution cost
Competitor analysis of categories in which client wants to play to analyze
likelihood of such responses and client’s ability to sustain itself with such a
response

Evaluation
A strong candidate will be organized and address all 3 case questions in a
structured and firm manner.
It may be helpful to repeat the questions at the outset of the final
recommendation.

155
 Quant Level – MEDIUM

Case #9: Contact Lenses (1/9) Case Type Industry Client Type

Contact Lens
Profitability Consumer Products
McKINSEY & CO – Round 1 – Interviewer Driven Provider

Fit Questions Interviewer Guidance

1. Tell me about a time you turned around a team. As an interviewer-driven case, each section of this case is structured around a specific question
2. Tell me about a time when you did not accomplish a to ask the candidate.
professional goal and what you learned from it. If the candidate asks for more information on the product or industry, provide the following:
(1) for the scope of this case, BB manufactures and distributes only in the U.S.;
(2) demand for contact lenses has been growing steadily at about 3% annually; and
(3) the client and its main competitor each sell about 10 Million contacts per year
(4) the industry has high barriers to entry (since a high R&D outlay is necessary), is mature (20
years plus), and is dominated by BB and its competitor, who are equal in most areas.
Fit Evaluation
Overall Fit Performance
S1 O1 A1 R1
2 2 2 2

Case Prompt Case Development

Your client is a well-known contact lens provider called BB. BB manufactures and distributes contact lenses in the U.S. 1. Framework
While BB is one of the largest players in the U.S. market, and has been for quite some time, the company feels that
compared to its main competitor, it is not doing as well as it could. 2. Questions and answers
3. Final recommendation and
BB has called in McKinsey to find out how to solve this problem and to recommend a solution.
synthesis
How would you go about structuring this case?
Case Evaluation
Structure and Framework
Note: If the candidate hasn’t clarified the purpose of the case i.e. what problem does BB want them to solve?), push
them to do so. This case will be unsuccessful if the candidate does not key in on this early on.
Analytical and Problem Solving Ability

Communication and Positive Attitude

Synthesis and Recommendation

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Case #9: Contact Lenses (2/9)
Framework Interviewer Guidance

Price A lot of people automatically assume that BB’s sales aren’t growing at the
Minor differences in pricing may exist, but probably nothing major. industry rate, or that BB isn’t satisfied with its market share. If the candidate
Customers may be price-sensitive, but given that lenses are fitted to a does, read back the statement of the issue in the introduction “is not doing
person by a doctor, customers do not purchase lenses purely on price; as well as it could and ask him or her to explain what that could mean. If
comfort, fit, and compatibility are big issues. the candidate still doesn’t get it, point out that the statement is very
subjective (it could be interpreted to mean many different things) and by
Product Mix then, the candidate should specify profitability.
Distribution/sales channels: competitor may be selling through more
profitable channels.
(This is a key takeaway and avenue for the case.) This is a profitability problem, so the candidate should utilize a classic
profitability framework.
Volume
Substitute goods: may be substituting away from BB? Any substitutes Contact lenses are commoditized, so difference in raw materials, prices, and
(Lasik, glasses, etc.) will likely hit competitor equally. fixed costs should be comparable across major competitors.
Competitor may capture more of market because of better branding,
better distribution, better price, better products? Could be possible, but
not an issue at this time. The best candidates will be specific about their bullet points, giving concrete
examples and eliminating certain areas based on their communicated
Variable Costs hypotheses. Often candidates don’t do this, so after the framework is laid
Raw Materials: inputs will be plastic, saline solution (water, salt), out, push back and ask the candidate to do this.
packaging (paper, aluminum foil, plastic). These are all commodities.
Labor: will be unskilled, and the wage rate probably set by minimum wage
standards. Unless BB is unionized and the competitor is not, nothing here If the candidate drives the case with a hypothesis, allow the candidate to do
to put BB at disadvantage to competitor. Thus, this is not an issue. so. Then, follow up with the questions on the subsequent page.
Fixed Costs
Plant, Property & Equipment
R&D: big cost factor, but likely equal between BB and competitor.
Overhead (People): no major differences as companies are of similar size.
Marketing/Distribution: probably no differences.
Legal issues: possible, but BB is probably big enough that even a huge class
action settlement shouldn’t affect its bottom line too much.

Working hypothesis: My hypothesis is that the problem lies with our client’s
profitability rather than it being a result of changes in the contact lens market.

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Case #9: Contact Lenses (3/9)
Question 1: Drivers Question 2: Costs
Ask the candidate: Ask the candidate:
Based on the information you’ve been given so far, or mentioned, and based After analyzing BB’s cost structure, McKinsey is confident that BB’s costs
on what you know about the contact lens industry, where would you prioritize are extremely competitive. Knowing this, where do you think the problem
your investigation? could lie?

The candidate should mention that the issue is on the revenue side and
What answer the candidate ends up with does not matter, but the specifically should focus on sales.
candidate should concretely and rationally eliminate certain options by
evaluating each area on their framework. The candidate should have outlined the four areas that impact sales:
product, price, promotion, place.
The easiest way to reason out possible problem areas is by thinking about
current, established major contact lens players such as Bausch & Lomb and Once the candidate comments on customer and product mix or
Johnson & Johnson. distribution, make the following comment and present Exhibit 1 –
Customer Mix:
McKinsey analyzed the distribution channels of BB and its competitor, and
Good candidates will incorporate their own experiences with contact came up with the following information.
lenses or optical solutions. Push the candidate to think about the
economics of the business and relate it to either their own experiences or
to people they know who use contact lenses.

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Case #9: Contact Lenses (4/9)
Exhibit 1

Sales Volume by Customer

Percent of Sales

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Case #9: Contact Lenses (5/9)
Guidance for Exhibit 1
Overview:
The Customer Mix slide is vague. The candidate should immediately walk through and clarify what is being represented. If not,
highlight some key points:
The slide shows customer mix in terms of volume. As a reminder, the competitor and BB sell equal volume annually (around
10,000,000 lenses per year).
There are three main channels / customers:
Big Box Discounter Walmart, Sam’s Club
Doctor’s Offices Local, non-chain doctor’s offices
Optical Retailer = LensCrafters, etc.

Important Takeaways:
Competitor sells more via Doctor’s Offices; BB via Optical Retailers
Each customer has a varying degree of buying power. Walmart purchases in large volume. Doctor’s offices purchase in small
quantities, and they are likely not as business savvy and do not have a procurement department. LensCrafters is in the middle.
These customers channels differentiate themselves: Walmart is known for cheap prices while doctor’s offices are specialized and
offer higher levels of service. LensCrafters is in the middle.

Key Insight:
BB and competitor charge the same prices for same products (as established earlier in framework). The issue is overall profitability;
therefore, the issue must lie in a pricing difference between the different sales channels that makes some channels more
profitable.
If the candidate has not clearly explained their reasoning behind why the pricing is different, probe by asking, “Does this surprise
you?” Then move to the next slide and provide candidate with Exhibit 2 – Profitability by Customer.

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Case #9: Contact Lenses (6/9)
Exhibit 2

Profitability by Customer

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Case #9: Contact Lenses (7/9)
Question 3: Channel Profitability Question 3: Continued
Question #3A Question #3B
Ask the candidate: Ask the candidate:

Can you tell me what you see here? Given this information and the initial problem we’re solving for, what would
you want to look at?
The candidate should analyze Exhibit 2 and decide to calculate profit and
The candidate should want to look at how we can sell more lenses in the
percent profit margin per channel. doctor’s office channel, possibly by shifting resources from the Big Box
channel.
Candidate should reach the following conclusions:
Big Box Discounter: $1.50 profit and 9% profit margin Question #3C
Doctor’s Office: . profit and profit margin Ask the candidate:
Optical Retailer: $8.50 profit and 39% profit margin
With what you see here, what are some additional alternatives to further
Once calculated, ask the candidate, “what are your thoughts?” before increasing profitability?
continuing with Question #3B.
The candidate should comment on how BB is behind competitors in the Since this is a channel strategy case, online direct to consumer alternatives
most profitable channel. should be mentioned; or, creating a subscription model service would
potentially be a feasible alternative.

Probe the candidate on risks for their proposed route. Some ideas include:
cannibalization of existing sales, logistics impact on profitability, time to
service and refill rates.

State that the client has, “elected to remain in existing channels and change
their distribution strategy.” Have the candidate calculate current
profitability.

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Case #9: Contact Lenses (8/9)
Question 4: Sales Reps Interviewer Guidance
Like its competitor, BB relies on sales reps to distribute its contact lenses to Provide the following information to the candidate when asked:
the doctor’s offices. Currently, BB has reps in its call center dedicated to Each sales call takes 30 minutes.
reaching out to the doctor’s offices and doing whatever is necessary to get Each sales rep works 20 days per month, 8 hours a day.
them to sell as many BB lenses as possible. Each sales rep spends approximately 3 hours of each work day on
administrative work, lunch break, etc.
Interestingly, McKinsey has discovered a relationship between call frequency Relevant Calculations
and sales generated: 8 hours a day less 3 hours a day for admin = 5 hours a day for sales calls
For every 2 calls made to a customer per month, our client sees a 5% 5 hours per day divided by 0.5 hours per call = 10 calls per day
increase in revenue from that customer.
10 calls per day times 20 days total = maximum capacity is 200 calls
For every 3 calls made, our client sees a 15% increase in revenue over
per month per rep
revenue for 1 call.
calls max less calls necessary “free calls
Currently, each B&B sales person has 100 customer accounts. Each account You can use all options to call additional customers (a) three times, or
must be called at least once a month, as B&B does not want to lose any (b) two times per month:
customers. Assume that sales per customers, when the customer is called Already have called all customers once, so to reach 3 calls per month,
once a month, is $100. must only call customer 2 additional times. Therefore, BB could call
100/2 = 50 customers 3 times per month.
Given these findings, what should BB do?
Alternatively, B&B could also call 100/1 = 100 customers 2 times per
The candidate should realize that they need to isolate the effect of month.
making additional calls to a customer per month.
Recall effectiveness of different numbers of calls:
1 call = $100
2 calls = $100 x 1.05 = $105
3 calls = $100 x 1.15 = $115
If all customers are called twice, then sales = 100 customers x $105 per
customer = $10,500.
Otherwise, sales = 50 customers x $100 + 50 customers x $115 =
$10,750.
BB should call 50 customers once and 50 customers 3 times.

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Case #9: Contact Lenses (9/9)
Risks and Next Steps
Recommendation
BB should sell more lenses in the doctor’s office channel and direct its sales Risks
reps to refocus their calling efforts to doctors for the following reasons: Potential competitor response and retrenchment
BB is behind its competitor in the most profitable channel doctor’s Possible customer fatigue and backlash from multiple sales calls each
offices) month
It can increase the efficiency and profitability of its marketing efforts by
changing calling frequency Next Steps
By calling 50 customers once and 50 customers three times, BB will
Evaluation of ways to strengthen relationships further with doctor’s
have a revenue of $10,750/mo.
offices to compete effectively against other competitor
Cycle through doctor’s offices getting three calls mo. to minimize
fatigue

Evaluation

Excellent candidate performance will include:

Talking through math.
Well-structured data.
Discussion about potential competitor response.

164
 Quant Level – LIGHT

Case #10: Deepwater Inc. (1/5) Case Type Industry Client Type

Investment Decision Energy Manufacturer

UNDISCLOSED – Round 1 – Interviewee Driven

Fit Questions Interviewer Guidance

1. Why did you decide to come to Booth? This case tests the candidates ability to analyze a manufacturing process and draw conclusions
2. Describe the best team you have ever had what about an industry with which they are not likely to be familiar. This case also tests a candidate’s
defined your experience? ability to deal with a more ambiguous solution to a case and to draw insights from discussions
and brainstorms. Strong candidates will continue to ask appropriate questions to arrive at the
details necessary to solve the case. The interviewer should pay close attention to the
candidate’s delivery as they navigate this somewhat complex case.

Fit Evaluation
Overall Fit Performance
S1 O1 A1 R1
2 2 2 2

Case Prompt Case Development

Our client, Deepwater, is an oil refinery firm looking at an investment in a filtering unit to transform residual oil into
1. Framework
useful feedstock to produce gasoline (show Exhibit 1). The major input is crude oil which gets refined to gasoline.
Deepwater would like your help in determining whether or not they should invest in the filtering unit. 2. ROI Analysis

Note: At this point, prompt the candidate to walk you through the diagram. Making sure to outline all categories of 3. Final recommendation
products:
Primary input - crude oil; secondary input - feedstock and fuel; byproduct - oil 6 and residual
Case Evaluation
Structure and Framework
The candidate should ask for information regarding the company’s products, the market for the products, uses for
waste products, and the company background. If they do not ask upfront, these questions should come out as the
Analytical and Problem Solving Ability
candidate discusses their framework.
Communication and Positive Attitude

Synthesis and Recommendation

165
Case #10: Deepwater Inc. (2/5)
Exhibit 1 (Operations)

GASOLINE
CRUDE Distiller
OIL 6

FEEDSTOCK
Distiller
RESID

FEEDSTOCK
Filter Cracker
Fuel

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Case #10: Deepwater Inc. (3/5)
Additional Information Framework
Please provide this information if/when asked: A good framework will allow the candidate to test their hypothesis regarding the
The usable output is gasoline.* two alternatives: production and profitability with the filter AND production and
Oil 6 can be converted to feedstock and then gasoline.* profitability without the filter.
Residual is a waste product unless the filter is purchased.* Residuals are
Working hypothesis: Deepwater should invest in the filtering unit.
leftovers (heavy oils).
Gasoline is sold to a competitive market and the company has no influence Scenario A (Without Filter)
on the price of gasoline. Revenues
There is enough demand for gasoline. Gasoline $/barrel
Fuel can be used to fire the different units. If fuel is not available, residual is Residual in $/barrel
used. Costs
The filter transforms residual into useful cracker feedstock. Crude $/barrel
Many of Deepwater’s competitors have invested in this kind of filter unit. Converting Oil 6 to feedstock and then gasoline; converting fuel to
There are no significant environmental concerns with respect to the filter. gasoline
There is no outside market for Oil 6 or feedstock.
Scenario B (With Filter)
Note*: A top candidate would recognize this on their own. If the candidate does
Revenues
not, make sure to clarify this.
Gasoline $/barrel
Costs
Make sure the candidate understands the diagram before moving forward. Crude $/barrel
Converting Oil 6 to feedstock and then gasoline; converting fuel to
gasoline
Investment in filter
Opportunity cost of converting residual instead of selling in $/barrel

Strategic Risks
Volatility of demand/price for inputs and outputs (crude, residual, fuel and
gasoline)
Regulatory changes impacting cost of residual waste production
Environment considerations and potential backlash

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Case #10: Deepwater Inc. (4/5)
Cost-Benefit Criteria Strategic Criteria
Ask the candidate the following questions: Ask the candidate:

On the diagram, which cost comparison is most relevant? If we sell all residual and buy fuel to make gasoline what concerns may arise?
The candidate should see the selling cost for the residual and the cost to Changes in fuel price and availability will impact cost / benefit of selling
purchase the fuel is most relevant to determining whether to purchase residual vs converting to feedstock.
the filter.
Note: Candidate should go through Porter’s Five forces focusing on buyer and
Under what scenario would you then utilize residual instead of purchasing supplier power (this should be an opportunity for structuring and
outside fuel (i.e. use residual instead of selling it)? brainstorming). As the interviewer, drive this to be a discussion between you
If the cost of purchasing fuel is more than the selling price for residual, and the candidate, continuously asking “what else?” and pushing the
the client should use residual. candidate to fully analyze all potential risks.

Investment Decision
The candidate should ask for more data on the different costs and selling prices. Only give data for items that the candidate brings up.
The client estimates an investment cost of $40M and a 20 year useful life of the filter (assume straight line depreciation).
The client also estimates annual operating costs of $4M per year for the filter.
With the filter we can make an additional 5,000 barrels/day at a contribution margin of $4/barrel.
The plant operates 350 days per year.
After discussing the above information, ask, “what is the payback period?”

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Case #10: Deepwater Inc. (5/5)
Annual Profit Risks and Next Steps
The candidate should do a similar analysis to the one shown here: Risks
Annual Revenue = $20K/day * 350 days/year = $7M/year Volatility in the market of residual and gasoline
Annual Operating Profits = Rev FC = $7M $4M = $3M/year Changing environmental concerns about the technology
Payback period = investment/operating profit Taxes on gasoline might increase, the firm may come under increased
$40M / $3M per yr. = ~13 years scrutiny from environmentalists, etc.
Lost relationships with customers that purchased cheap residual
Payback period is approximately 13 years, which is enough to cover for
additional depreciation. Next steps
Annual profit after depreciation is $1M. Assess volatility in the markets in both the short and long term to
determine any impact on the investment decision
Perform sensitivity analysis under different tax scenarios and technology
implementations to evaluate profitability
Identify new customers for gasoline or additional byproducts

Recommendation
It is profitable for the client to invest in this filtering unit
Payback period is 13 years
Annual profit after depreciation is $1M

169
 Quant Level – LIGHT

Case #11: Electric Utility (1/5) Case Type Industry Client Type

Profitability Energy Utility Company

McKINSEY & CO – Round 2 – Interviewer Driven

Fit Questions Interviewer Guidance

1. Tell me about a time when you had to convince This is a Round 2 case and involves a lot of qualitative discussion with the candidate. It is
leadership of your idea. What challenges did you face important that the candidate takes time to structure their thoughts every time a question is
and how did you react? asked during this case. You should be prepared to push the interviewee beyond the initial set of
2. Tell me about a time when you had to work under tight responses by asking “what else?
timelines. How did you approach this situation?
Also, the candidate should take some time to summarize the issue and use an appropriate
framework (profitability framework) to respond best to the qualitative discussions. Have the
candidate go through their framework initially before asking further questions.
Fit Evaluation
Overall Fit Performance
S1 O1 A1 R1
2 2 2 2

Case Prompt Case Development

Our client is GPE, a producer of electricity. Here are a few concepts about electricity generation that will help you in
this case:
1. Framework
There are several ways to produce electricity: water, coal-fired plants, nuclear, wind, etc. 2. Q & A and discussion
Electricity can be supplied to a wholesaler or to consumers directly.
Electricity transmission is highly regulated because the wires used to transport electricity are mostly government 3. Recommendation
controlled. However, electricity usage is mostly deregulated (i.e. the government does not set the price, it is set by
competitive forces).
Case Evaluation
Structure and Framework
Our client has 10 plants that produce electricity using coal. The client obtains coal partly from its own coal mines and
partly from 3rd-party providers. Of late, the client has seen the profitability of its coal generated electricity decline.
Analytical and Problem Solving Ability
What could be causing this?
Communication and Positive Attitude

Synthesis and Recommendation

170
Case #11: Electric Utility (2/5)
Framework Framework Discussion
Below is a potential framework that the candidates should use for As the candidate goes through various parts of the framework, share the
profitability. information below. As the interviewer, you should wait for the candidate to ask
for this, but eventually share the information even if the candidate does not
Working hypothesis: Increasing costs are causing the decline in profitability explicitly ask.
since there are no real opportunities on the revenue side.
Price
This is a deregulated industry; price is set by competitive forces.
Profits There is one price set per the entire year.
As a simplification, assume the same price is charged to all customers.

Volume
Revenue Costs GPE supplies electricity to over 1 M customers (a customer is a household or
Market
business) in deregulated markets through wholesalers.
Volume is generated by demand. The market is fragmented.
What are the The market is growing at about 3% per annum.
market Fixed Variable
Price Volume
Costs Costs
dynamics? Insight #1
No Good candidates will deduce that since the market sets the price and this is a
competition How is price No. of Lease or Raw
set? househol own material mature industry, currently the supply meets all the demands. There is not much
but are
Does it ds or transmissi costs opportunity in terms of volume and price.
customers
opting for change over customer on lines? coal,
alternate
time? s Other nuclear, Fixed Cost
Price Competit fixed costs hydro? GPE runs 10 plants around the US.
forms of
discriminati or’s Labor GPE pays a fixed cost to lease transmission lines to transmit the electricity
energy? on volume
Shift in produced.
Regulation Market
wholesaler vs. by growth
individual government Variable Cost
consumer As a simplification, consider the main raw-material to be coal.
consumption?
Insight #2
The candidate should consider looking deeper into the cost side, because it was
already deduced that there aren’t any opportunities in the revenue side.

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Case #11: Electric Utility (3/5)
Question 1 Potential Response
Let’s explore the cost side in more detail. A simplified supply chain for 1. Acquiring the coal:
electricity consists of 3 parts: The coal may have to be transported across some distance. This could be done
1. Acquiring the coal through rail or road. There are potential savings here in optimizing the
2. Generating the electricity transport channel.
3. Transmitting the electricity The coal is received from several sources: GPE’s own coal mines and rd-party
mines. The quality of coal (its energy content) is likely to be different in
What potential issues may lie in each of the above? different mines. Hence, processing different types of coal probably takes
different processes and machines. This diversity could be a potential cost
generator and this could be handled by sourcing for more similar coal varieties.
The coal mines could be in a geographically separate region, subjecting GPE’s
coal supply to other regions’ risks for e.g., climatic factors such as hurricanes,
political turmoil, etc.)
The coal mines are probably unionized, and that may add to volatility in our
coal supply.
2. Generating the electricity:
The electricity generators may be old and not functioning efficiently, inducing
Interviewer Guidance
waste in the system.
Allow the candidate to brainstorm at least 3 potential issues for each of the There are different plants in the client’s company. Differences in operations
above parts. Prompt the candidate to brainstorm more by persistently asking, of these plants may induce volatility in the system.
“what else?” after each response until the candidate provides at least 3 issues The availability of labor may have changed by the arrival of other industry or
for each part of the supply chain. competitors nearby.
Given that GPE generates electricity through coal, some new environmental
Note that this case is about brainstorming and generating ideas and not about laws may have come into force increasing the cost of electricity generation.
numbers.
3. Transmitting the electricity:
Push the candidate to bring specific elements to the discussion.
Transmission could be streamlined by finding more customers closer to the
electricity plants themselves.
GPE could look into a bandwidth sharing contract so that their lease may be
cheaper.
GPE can look into checking the transmission lines for repairs, etc. that may be
required so that there is less electricity loss in transmission.
Provider applying peak-hour surcharges to regulate customer usage

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Case #11: Electric Utility (4/5)
Question 2 Interviewer Guidance
GPE is primarily an electricity generating company. Do you think they should Here is some information that can be shared with the candidate if the
keep the coal mine? candidate asks for it:

GPE gets a 30% cheaper rate on coal from its own coal mines than
compared to 3rd-party coal mines.
There is a large market for coal.
Coal customers are diverse, electricity producers are just one of many.
As a simplification, assume that all coal customers pay the same market
price for coal when they purchase coal from coal mines

With the above, candidates may be tempted to deduce that GPE should keep
the coal mine because they get coal cheaper from their own coal mine.

If candidates say this, remind them that:

Potential Response
Yes, GPE is getting coal cheaper from their coal mines. But they can also
sell the same coal to other customers and make the same profit.
Candidate’s response should include a qualitative assessment of the cost-
benefit analysis for the two scenarios: What is the advantage of using their own mined coal for their electricity
1) Use the coal from their mine to generate electricity and sell the coal from generation operation?
their mine for profit.
2) Buy coal from other coal mines.

Note:
Having their own coal mine reduces supplier power for GPE. GPE’s
electricity generation operations have the advantage of encountering less
volatility in the supply of their core raw material, coal. GPE can control the
coal production and hence can have less volatility in coal quality and labor
issues.
GPE’s business is more diversified through the coal mining operation.

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Case #11: Electric Utility (5/5)
Question 3 Discussion for Question 3
On an average, GPE operates at utilization. GPE’s CEO saw this statistic and Tell the candidate that the “demand for electricity is cyclical . Ask the candidate,
asked McKinsey if they should look into increasing this from 80% to 90%. what might that imply?
Candidates should point out that it means there are peaks and troughs in
Given that the industry average is to operate at 77% utilization, how would you electricity demand (e.g. air conditioners working over time during summer).
approach this problem?
As an electricity company, GPE is committed to meet the peak demand and so, it
is normal to operate at less than 100% utilization. GPE is already operating at
close to the industry average and it may be unrealistic to expect the utilization to
increase to 90%.

Recommendation Risks and Next Steps

The key reason for profitability decline is an increase in cost: Risks
Acquisition costs of coal are higher potentially because of Client is unable to negotiate better contracts with 3rd party coal mines /
transportation, 3rd party coal mines, unionized labor, etc. labor unions and is unable to obtain sharing contracts reducing the cost of
Cost of electricity generation is potentially high because of old electricity transmission
equipment, operational inefficiencies, etc. Continued increases in costs along all parts of the value chain
High costs of electricity transmission
GPE should continue the use of its coal mine Next Steps
It should also ignore the pressure to increase the utilization to 90% Identify the top 5 cost savings opportunities, especially regarding
electricity generation activities, for client to internally reduce production
costs
Build an implementation plan to ensure prioritization of cost reducing
steps along the value chain

174
 Quant Level - HEAVY

Case #12: Elena’s Electronics (1/ ) Case Type Industry Client Type

Consumer Electronic Goods

Profitability
UNDISCLOSED – Round 1 – Candidate Led Electronics Chain Store

Fit Questions Interviewer Guidance

1. Tell me something interesting about you that is not on A strong candidate may ask about criteria for success. Instruct the candidate that “profitability is
your resume. very important, but they want us to take a broad look at whether the pilot was successful”.
2. What would you bring to the Firm?

Fit Evaluation
Overall Fit Performance
S1 O1 A1 R1
2 2 2 2

Case Prompt Case Development

Our client is Elena’s Electronics, an electronic goods chain store. Historically, the client relied on rapid opening of new
stores to increase growth. However, the client’s presence is now so broad that it must also look for internal growth. In
1. Framework
, Elena’s Electronics tested a pilot that changed the responsibilities of staff in its cell phone division. 2. Analysis of store revenues
In the old model, all employees were expected to handle all tasks related to sales and products. Under the new
program, there are two different types of employees: sales specialists and product specialists. Sales specialists handle
all customer interactions, such as talking to customers about their needs and recommending products. Product
specialists handle all product management functions, including inventory, ordering, and shelf management. Case Evaluation
Structure and Framework
The purpose of the pilot was to see whether sales specialists could target customer needs better and thus increase
profits from phone sales. Our client wants us to assess whether or not the program was successful and whether it
Analytical and Problem Solving Ability
should expand the pilot program to all the divisions of the stores.
Communication and Positive Attitude

Synthesis and Recommendation

175
Case #12: Elena’s Electronics (2/ )
Interviewer Guidance
Framework
Working hypothesis: Elena’s Electronics should expand the pilot program to Strong candidates should focus on profitability, but they should not forget to
increase profitability across all of its divisions. look into other success metrics such as:
Morale/motivation of the sales team
Was the pilot program successful?
Customer experience
Profitability Competitor response
Revenue Brand development
Cost
Other metrics
Brand
Competitive positioning
Customer experience

Would the pilot program be repeatable?

Similarity of cell phone division to other divisions
Customer base consistency across departments
Case Development
Workforce readiness for the transition
The focus of this case is on profitability, so the candidate should start there after
explaining their framework. If the candidate asks about qualitative factors, share
the following information:

Other Divisions: The other primary divisions at Elena’s Electronics are

televisions, laptops, smart appliances, and new tech (drones, 3D headsets, etc.).
Their sales were unaffected by the pilot for the cell phone division.

Competitors: The primary competitors to Elena’s are big box electronics stores,
such as Best Buy. These stores have a wide variety of staffing models there is
no clear industry standard.

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Case #12: Elena’s Electronics (3/ )
Economics Exhibit 1: Solution
When the candidate mentions that they would like to explore revenue, say, “I The candidate should calculate revenue per store and phones sold per store.
have some financial statements with me. Which number you would like to If the candidate is stuck, prompt with “How much did the average revenue per
start with?“ store change as a result of the pilot program? How about the number of
phones sold per store?”
Show Exhibit 1, but make sure to cover up Exhibit 2 first.
2016 2017
Number of stores 120 160
Total phone revenue $36 M $44 M
Total phones sold 54,000 104,000
Revenue/store $300 K $275 K
Phones sold/store 450 650

The candidate should identify that while phones sold per store are up, store
revenues are down. A strong candidate will conclude that this is likely due to
the product mix sold as a result of the program.

When the candidate asks if there is additional information that could help
explain changes in product mix, reveal Exhibit 2.

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Case #12: Elena’s Electronics (4/ )
Exhibit 1 Exhibit 2

2016 2017 Product

Selling Elena’s Quantity Sold Quantity Sold
Price COGS (2016) (2017)
Number of stores 120 160
Deluxe $1,000 $700 24,000 16,000
Total phone revenue $36 M $44 M Midrange $500 $400 18,000 24,000
Total phones sold 54,000 104,000 Budget $250 $200 12,000 64,000

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Case #12: Elena’s Electronics ( / )
Exhibit 2: Solution Exhibit 2: Analysis
Candidates should solve for the quantities sold in different product lines. There has been a shift to selling more budget phones and fewer deluxe
Candidates should also solve for per-store profit. phones. As a result, profit per store has decreased, despite an increase in the
overall quantity of phones sold. The candidate should suggest that this is
Option 1: likely due to the new program.
Quantity per store
Product Quantity per store (2016) After the candidate identifies that total profit per store has decreased as a
(2017) result of the program, ask them to brainstorm reasons for why this might be
Deluxe 24,000/120 = 200 16,000/160 = 100 happening. If the candidate asks about the sales compensation program
Midrange 18,000/120 = 150 24,000/160 = 150 under the new specialist model respond that “compensation is based on the
Budget 12,000/120 = 100 64,000/160 = 400 quantity of cameras sold.”

Option 2: A strong candidate will synthesize that sales of the budget phones are
Profit increasing because sales specialists are recommending the budget phones to
Product Total profit (2016) Total Profit (2017) the consumers. This may be occurring because the budget phone is easy to
Margin
$300*24,000 = $7.2
$300*16,000 = $4.8 sell due to its simple function and low price.
Deluxe $300
M M
$100*18,000 = $1.8
$100*24,000 = $2.4
Midrange $100
M M
$50*64,000 = $3.2
Budget $50 $50*12,000 = $0.6 M
M
Total $9.6 M $10.4 M
Total per store $9.6 M/120 = $80 K $10.4 M/160 = $65 K

Profit Per store profit Per store profit

Product
Margin (2016) (2017)
Deluxe $300 200*$300 = $60 K 100*$300 = $30 K
Midrange $100 150*$100 = $15 K 150*$100 = $15 K
Budget $50 100*$50 = $5 K 400*$50 = $20 K
Total per store $80 K $65 K

179
Case #12: Elena’s Electronics ( / )
Recommendation Risks
The pilot program caused a decrease in phone revenue and profit per The program may have brought about some benefits, and changing it could
store, so the pilot should not be expanded to additional divisions reverse those benefits:
The per-store profitability for phones decreased from $80 K to $65 K Morale/effectiveness of sales specialists from new compensation
Elena’s experienced a x increase in the number of budget phones sold, structure
but a 50% decrease in the number of deluxe phones sold. Customer experience
Cross-selling in other divisions
Sales specialists are compensated in a way that motivates them to sell
lower margin products

Next Steps

Redesign the program:

Better train sales specialists, bring incentives to focus on more
profitable phones, and involve sales specialists in the review of their
compensation package
Study customer journey
Examine revenue and profit differences that could be traced back to this
program

180
 Quant Level – HEAVY

Case #13: Finance Co (1/6) Case Type Industry Client Type

Growth Strategy Financial Services Asset Management

BAIN & COMPANY – Round 1 – Candidate-led

Fit Questions Interviewer Guidance

1. What are your career goals over the next 5-10 years This is a market entry case, but the main question to be answered is: Which market has the best
and how does consulting fit into that? growth perspectives: IRA or Defined Contribution plans?
2. What do you typically do when you move onto a new
project? Additional Information (only share if asked by interviewee):
Over the life of a U.S. worker, they generally build up assets in DC plans.
During job change or retirement, most workers will ‘roll’ transfer DC assets into an IRA.
Transfer may only occur from DC to IRA, not vice versa.
At retirement, people will begin to withdraw their balance over time.
Fit Evaluation
Pay attention to the interviewee’s structure organization during the quantitative section of the
Overall Fit Performance
S 1
O 1
A 1
R 1 case.
2 2 2 2

Case Prompt Case Development

Our client, Finance Co, is an international asset manager who concentrates on retirement account administration. 1. Framework discussion
They are considering entering the US retirement market. Finance Co cannot decide whether to target the Defined
Contribution (DC) market (e.g. 401k) or the Individual Retirement Account (IRA) market. 2. Market Potential
Each market contains ~$3 trillion in investable assets and generates about the same amount of margin per dollar 3. Revenue analysis
of investable assets.
U.S. workers and their employers typically make investments in DC plans while working.
4. Recommendation
Upon job change or retirement, workers have the option of taking distributions, which remain tax deferred if
Case Evaluation
rolled into an IRA.
Structure and Framework

What is the growth outlook for each of these markets over the next 5 years? Which market is more attractive for
Analytical and Problem Solving Ability
Finance Co?
Communication and Positive Attitude

Synthesis and Recommendation

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Case #13: Finance Co (2/6)
Framework Interviewer Guidance
After discussing the framework, the interviewee should be able to identify
that population is a key driver for estimating growth of both markets.
Show only Exhibit 1, cover Exhibits 2-3.

Exhibit 1
If necessary, push candidate to discuss which segments of the population
look interesting and which segments of the population will grow vs. shrink
over the next 5 years.
Candidate should ask for DC and IRA balances to determine total market
size. Uncover Exhibits 2-3.

Exhibit 2&3
If necessary, push candidate to discuss main differences between DC and
IRA balances.
Higher DC balances earlier in life are due to DC contributions tied to
employment.
Higher IRA balances later in life are due to ability to ‘roll’ DC
contributions upon job change and/or retirement, and workers are no
longer able to make DC contributions in retirement.
If necessary, push candidate to draw conclusions from previous analysis on
population trends and identify that the IRA market looks more interesting
considering aging of population . If candidate doesn’t come to this
hypothesis, ask them what are the population trends.
Candidate should request information about future performance. Show
Transition statement: Since population is the key growth Exhibit 4, cover Exhibit 5.
driver for the IRA or DC market, I would like to begin by
determining how the current US population is changing
over the next 5 years, specifically by age group.

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Case #13: Finance Co (3/6)
Math Analysis (for interviewer) Interviewer Guidance
Exhibit 4
Ask candidate:

Calculate the total value of the DC and IRA market today and in the next five
years.

A good candidate should only need to confirm initial hypothesis that IRA is
more interesting and then use the provided exhibits for the math exercise.

Exhibit 5: (Optional, complete if time permits)

After discussing Exhibit 4, ask candidate the below question, then uncover
Exhibit 5.

Based on the information in Exhibit 5, you can see the rollover of DC

distributions into IRAs have been identified as a key factor in IRA market
growth. Assuming all else remains equal, let's say the IRA market was
projected to grow to $3.1T next year. What DC rollover rate would result in
growth in IRA's to $3.05T versus $3.1T?

Answer: 50% rollover rate is needed

Currently, a 75% rollover rate is resulting in $150B contribution to IRA
growth (75% of $200B). To reduce IRA growth by $50B to $100B, rollover
rate must be reduced by 1/3 to 50% (50% of 200B is $100B).

Synthesis
After analysis of Exhibit is completed, ask for the candidate’s
recommendation. Tell interviewee that Exhibit 5 was an independent
exercise and not necessary for the recommendation.

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Case #13: Finance Co (4/6)
Exhibit 2
1

Age Group

Exhibit 3

Age Group

Age Group

184
Case #13: Finance Co (5/6)
Exhibit 4 Exhibit 5 (Optional, if time permits)

Age Group *Transferred to new plan

185
Case #13: Finance Co (6/6)
Evaluation
Recommendation
Finance Co should enter the IRA market due to a greater 5 year growth Based on the market growth outlook calculation, Finance Co should enter
outlook the IRA market over the DC market. A strong candidate response will
Predicted $3.36T in the IRA market versus $3.19T in the DC market provide a clear recommendation backed by data with a mention of key
The aging population trend further confirms that the IRA is more favorable risks and next steps to moving forward.

A strong candidate will also recognize that there are several additional
analyses that are essential to a strong, well-rounded recommendation.

The candidate should reference their framework when determining

additional analysis.

Risks and Next Steps

Risks
Lack of analysis on Finance Co’s ability to capture market share
Adverse regulatory and/or political environment
Financial position of Finance Co

Next Steps
Need to determine:
Competitive environment of each market
Competitive response to Finance Co entering each market
Finance Co’s marketing and sales capabilities
Consider:
Lobbying
Analysis of future changes
Analyze company capabilities and fit of IRA market with Finance Co’s
existing products / services

186
 Quant Level – LIGHT

Case #14: French Beauty Co (1/5) Case Type Industry Client Type

Beauty Products
Operating Model Retail & Apparel
ACCENTURE – Round 1 – Interviewee Led Company

Fit Questions Interviewer Guidance

1. Tell me about the largest impact you’ve ever had on a This case includes multiple brainstorming exercises and is light on math.
team.
2. How would you handle being on a project in X industry, Additional Information (only share if asked by interviewee):
outside of your expertise? Would you be excited for There is an impending recession.
this work? This is a maturing industry in developed markets, but emerging markets are seeing explosive
growth.
A leveraged organization is the same as a centralized organization.

Fit Evaluation
Overall Fit Performance
S1 O1 A1 R1
2 2 2 2

Case Prompt Case Development

A large French beauty products company with a revenue of $2B operates as manufacturer, seller and marketer of 1. Background Discussion
luxury fragrances. This company sells to high-end beauty retailers. Recently, the company has acquired a player in the
‘accessible’ beauty products industry. 2. Initial brainstorming
3. Additional revenue analysis
The acquired company manufactures, sells and markets skincare and cosmetics. Being that the two companies operate
similarly along their value chains, the COO has opted to combine manufacturing, but initially keep the two sales units
4. Recommendation/Wrap-up
operating separately because the luxury sales unit and the accessible sales unit don’t have the same customers.
Case Evaluation
However, the COO is interested in understanding if additional value can be realized by integrating the two sales
Structure and Framework
organizations.
Analytical and Problem Solving Ability
Your goal is to help the COO determine if a leveraged or a decentralized sales organization is a valuable strategy for
the company.
Communication and Positive Attitude

Synthesis and Recommendation

187
Case #14: French Beauty Co (2/5)
Framework Brainstorming Insights
Revenue Increase
- Volume increase (New channels, increased capacity, sales efficiency,
buik savings opportunities)
- Price Increase (more informed pricing decisions)
Leveraged (Centralized) Decentralized
Cost Savings
- Supply chain/ staffing synergies
- Improved contracts with suppliers (bulk buying) Reduce redundancies Flatter org structure could
- Reduced SG&A footprint Streamline best practices encourage fast acting
Fit Human capital synergies Familiarity with status quo
- Leadership and Organizational change Reduce costs roles
(+)
- cultural change Centralized control and Broad knowledge
- dilution of luxury brand accountability
Operations Brand synchronization
- Procedural changes
- Time/cost of integration Employees will be unfamiliar Lack of accountability could
Brainstorm with the new standard lead to a hold-up problem
operating procedures Increased costs
Transition statement: To determine which sales organization structure is best,
(-) Leadership changes may No common goal
I would like to focus on sales generation in a leveraged versus a decentralized
disrupt familiar culture No brand synchronization -
sales organization.
Bureaucracy stifles decision could lead to customer
making confusion
Once the candidate explains their framework, ask, “what are the advantages
and disadvantages of each operating model?”
Push the candidate to consider several of the options listed to the right,
ensuring they list both advantages and disadvantages for each sales
organization structure.

188
Case #14: French Beauty Co (3/5)
Question 1 Questions 2 & 3
Once complete with brainstorming, tell the candidate: Question 2:
How much revenue could be gained by selling fragrances at Walmart, and would
The CEO has stopped by to let us know that the company’s Board has met and is it be enough to satisfy the Board’s goals?
upset about their profitability. They have indicated that a 5% generation of
added value above their current $2B needs to be achieved by this year. When the candidate asks about the possible market capture and / or
manufacturer margins, let them know that a market analysis performed by
Show the candidate Exhibits 1 & 2, and walk the candidate through the Accenture showed that 25% of the revenue could be captured by our client.
following three questions: Have the candidate perform the following calculations to determine if that
would be enough to satisfy the Board’s goal.
Question 1:
Based on the two provided exhibits, what are some ways to achieve the added $400M in Revenue * 25% = $100M potential revenue
value goal?
$100M/$2B= 5%
Push the candidate to initially focus on revenues and not costs.
Candidate should identify that Walmart generates a significant amount of Selling fragrances at Walmart would achieve the Board’s goal.
revenue through the sale of fragrances more than any of French Beauty Co’s
current fragrance retailers) a channel that our salesforce has not tapped
into currently. Question 3:
If asked, interviewer can provide additional information on the fact that How else could the COO drive the required 5% value add?
our client, being a major sales and marketing force in the industry, can
easily pivot to manufacture perfume for the “accessible customer by Have the candidate brainstorm potential answers, which include:
tapping its talented workforce. Reduce costs
Look into emerging market growth
Improve advertising
Identify new retailers / customers
Addition new product lines

189
Case #14: French Beauty Co (4/5)
Exhibits
Retailer’s Revenue by Product Line

600

500
Revenue ($MM annually)

400

300

200

100

Fragrance Skincare & Cosmetics

French Beauty Co Sales Unit Acquired Company Sales Unit

Primary retail outlets sold Macys, Bloomingdale, Saks, Nordstrom Walgreens, Walmart, CVS
to: Neiman Marcus

Product Sold: Fragrances Skincare and cosmetics

190
Case #14: French Beauty Co (5/5)
Risks and Next Steps
Recommendation
French Beauty Co should shift to a leveraged (centralized) sales Risks
organization Challenges in combining different cultures; unfamiliarity with new standard
This would allow the company to manufacture and effectively sell operating procedures
“accessible perfume to Walmart Leadership changes may disrupt familiar culture; bureaucracy stifles decision-
This will result in the projected 5% revenue gain that will appease the making
goal set by the Board Ability to obtain shelf space for fragrances at Walmart

Next Steps
Additional Benefits that may be mentioned:
Identify similarities and differences between the two firms; develop strategic
Use of existing customer relationships to sell “accessible perfume in plan to bring them together
new channels will be valuable Craft message from leadership and develop internal feedback system to
Encourages education, knowledge sharing and shadowing amongst maintain pulse on employees’ satisfaction and ability to be successful at work
the reps in each sales organization Leverage existing relationships at Walmart to design strategic market entry
Creates a unifying culture and vision for the company plan
The accessible perfume market will be key in an economic downturn
Evaluation

Assessment is based on qualitative brainstorming and quantitative

approach during analysis section.
Exemplary candidates are able to:
Support their brainstorming with evidence and / or examples.
Go back to the framework for additional ideas; often is a valuable tool to
generate deeper insights.
Demonstrate strong analytical abilities in the value generation calculations.
Summarize the discussion and create a strong and clear final recommendation.

191
 Quant Level – MEDIUM

Case #15: German Telecom (1/5) Case Type Industry Client Type

Profitability Telecommunications Telecom Company

BCG – Round 1 – Candidate Driven

Fit Questions Interviewer Guidance

1. Tell me about a time you’ve faced a challenge as part of This case assesses critical thinking and analytical problem solving while evaluating the
a team. profitability of a specific action for the client. It is a great case for testing a candidate’s ability to
2. Tell me about a time when you led a team to elevate its ask the right questions to obtain the correct information and drive the problem forward. It is
performance to a new level. heavily candidate-driven.

Provide the case prompt below and then provide additional information (on the following page)
only as the candidate asks for it. You should allow the candidate to drive the interaction.

Fit Evaluation
Overall Fit Performance
S1 O1 A1 R1
2 2 2 2

Case Prompt Case Development

Our client is a large German telecom company. It is considering making a bid in an auction for one of 5 licenses to 1. Background Discussion
operate a new generation of mobile phone networks (4G) in the United Kingdom. 2. Initial brainstorming
3. Additional revenue analysis
It has engaged BCG to help with the issue and determine the appropriate strategy for the auction. 4. Recommendation/Wrap-up

Case Evaluation
Structure and Framework

Analytical and Problem Solving Ability

Communication and Positive Attitude

Synthesis and Recommendation

192
Case #15: German Telecom (2/5)
Interviewer Guidance
If the candidate asks for more information on the AUCTION, provide the following:
The auction will be a sealed bid auction with all bids received simultaneously. Since it is a sealed bid auction, our client will not know the true bidding
strategies of its competitors with any certainty.
The licenses will go to the highest 5 bidders. Each bidder can attain only one license. The licenses will be valid for 5 years.
The British government intends for the auction to open the mobile phone market to competition to help control consumer prices. As a result, one license has
been reserved for a new entrant, but the other four are open to both new entrants as well as established competitors.
The auction is the first of its kind for 4G networks in Europe.

If the candidate asks for more information on the TECHNOLOGY, provide the following:
The most important characteristics are the high data speeds and increased capacity for service that it offers.
It will enable data speeds of up to 5x greater than the most advanced 3G networks available today.
Additional 4G spectrum enables incumbent wireless companies to build out their capacity in order to support more customers and to enable high-bandwidth
services in an environment that is increasingly capacity-constrained.
Following the introduction of 4G technology, old technology networks will be phased out by the government over the span of 3 years.

Note: The candidate should, at this time, draw out a framework. Below is more information the candidate may ask for; provide this only if the candidate asks.

If the candidate asks for more information on the CLIENT, provide the following:
It is a market leader in Germany.
It has a large presence in the rest of Europe, but no presence in the United Kingdom currently.
It has been experiencing stagnating growth and is looking for opportunities to expand.
It has the financial capability to bid what is needed, but does not want to overpay for the license.
It has the financial capability to build the network that will be needed to operate in the UK.

If the candidate asks for more information on the COMPETITION, provide the following:
It is unclear how many competitive bids will be received or who will bid.
Four major operators exist in the current UK market, and they roughly split the market equally.
They already have established networks as well as retail outlets that can be leveraged for the introduction of 4G technology.

193
Case #15: German Telecom (3/5)
FrameworkInformation
Additional
The Market
Approximately 30 million people have a mobile phone in the UK.
Converting to the new network will require the purchase of a 4G network-
enabled device.

Volume
Some potential for growth beyond current market due to new services.
Must consider that conversion of customers will be critical and that client is at a
disadvantage compared to established competitors.
A likely outcome is that our client will receive less than 1/5 of the total customers
due to new entrant status.

Price
Customers pay £30 per month for their current mobile phone plans, cost is Working hypothesis: The client should bid for the license as long as
expected to be higher for 4G. profitability can be established, in PV terms, for the life of the license. I
Could charge additional fees for additional services and allow customer to pick would first like to calculate this and then establish the bid price.
and choose what they want.
Could charge more for a fixed plan with all services included; however, there will Interviewer Guidance
also be increased competition in the market.
The candidate should utilize industry specific terminology and examples as
Candidate should consider both the factors that will increase the price (new
services) and decrease the price (increased competition). they walk through the framework.

Fixed Cost There are two parts to this case. First, the candidate must assess if the
Significant upfront cost for our client as they must set up the network and retail market is attractive for our client by assessing the total profitability over the 5
chains. years life of the license. Once complete, the candidate should determine an
Upfront costs not as significant for established competitors (a key disadvantage appropriate bid price.
for our client).
Once network is established, fixed costs consist of: Do not provide the candidate with all of the information on the right. Rather,
Network operation push them to make assumptions about each factor and work with them to
Maintenance uncover the information. Actual numbers for the calculation are provided on
Retail operations, etc. the next page.
Variable Cost
Minor once network is established (i.e. one extra customer costs little).

194
Case #15: German Telecom (4/5)
Assessing Profitability Data to Provide
The candidate should be driving to calculate the annual revenues and costs If the candidate is struggling to come up with values for price, volume, fixed
in order to calculate the profitability and present value of the future cash cost, and variable cost, provide the following guidance:
flows for the next 5 years (life of the license).
Price
At this point, instruct the candidate not to worry about discounting future Average price per customer is likely to increase to £50 due to new service
cash flows (or tell them that the discount rate is 0%). adoption among key customer segments.
Volume
Note: Some candidates may come up with their own assumptions (e.g.,
retention rate of customers, adoption rates, market growth each year, etc.). Assume an increase of 33% in customers (to 40M) overall.
Feel free to allow for more difficult calculations depending on the Assume the client will receive 1/8 of market annually (5M total).
candidate’s level of case practice. The solution below is simply illustrative. Fixed Costs
£740M to build network.
£50M to run network annually.
Variable Costs
£50M to run network annually.

Calculations
Our client’s bid is based on an assessment of Revenues Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 TOTAL
profitability: Price/Customer £600 (£50x12) £600 (£50x12) £600 (£50x12) £600 (£50x12) £600 (£50x12)
The bid could be as high as the total value of the # of Customers 5M 5M 5M 5M 5M
Revenues £3B £3B £3B £3B £3B £15B
cash flows from the license (break-even). Costs Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 TOTAL
The candidate should consider if the bid should be Build Network £740M £0 £0 £0 £0 £740M
lower to realize some profits from the venture. Run Network £50M £50M £50M £50M £50M £250M
Variable Costs: £50M £50M £50M £50M £50M £250M
As a result, the bid will be no higher than £13.76B. Total Costs £1.24B
Total Profit £13.76B

195
Case #15: German Telecom (5/5)
Evaluation
Recommendation
German Telecom should bid for the 4G mobile network in the United A good candidate response will provide a clear recommendation backed by
Kingdom the data with a mention of key risks to moving forward.
Bid price can be up to £13.76B based on projected profits and break-even
analysis A strong candidate will also recognize that the 4 UK-established competitors
Our assumption is based on an expected market share of 1/8 due to fierce are willing to pay far more as their fixed costs will likely be significantly lower.
competition, especially with several companies already established in the This would imply that it is unlikely that our client would be willing to outbid
UK. the established competitors as a result. Instead the client’s real competition
comes from other new entrants for the license reserved for them.

Risks and Next Steps

Risks
Competition from foreign telecom companies; inability to capture 1/8 market share
Unable to charge estimated average price of £50, which leads to lower revenues
Government issuance of additional licenses or withdrawal of existing licenses

Next Steps
Appraisal of foreign competitor landscape and likelihood of other new entrants into
UK market
Market analysis to calculate feasibility of capturing intended market share
Pricing analysis to determine customers’ actual willingness to pay for higher speed
service
Develop contingency plans to deal with new regulations should they arise

196
 Quant Level – HEAVY

Case #16: Green Co (1/6) Case Type Industry Client Type

Investment Decision Retail & Leisure Apparel

DELOITTE – Round 1 – Interviewer Driven

Fit Questions Interviewer Guidance

1. Tell me about yourself. This case is interviewer driven, uses a non-traditional format (it has no framework), and includes
2. Tell me about a time you had unclear instructions for a NPV calculation. It is a great case for an interviewee who is in the mid-to-late stage of casing
task and how you approached this task. and who desires a very quantitative case.

There are several questions which will be outlined in this case. You should provide the case
prompt and then show the candidate Exhibit : Data Sheet for the candidate’s reference
throughout the case. Before asking question 1A, allow the interviewee to review the data sheet.

Fit Evaluation The BAU scenario is one in which the company implements no carbon emission reductions.
Overall Fit Performance
S1 O1 A1 R1
2 2 2 2

Case Prompt Case Development

Our client, Green Co, is a $10B global manufacturer and retailer of high-end outdoor apparel, with several well-known brands. 1. Case Prompt and Data Sheet
The company has big growth aspirations. Through organic and inorganic growth, Green Co is hoping to grow from $10B in
Review
revenue in FY11 to $15B by FY15.
2. Questions 1-4
At the same time, the CEO has recognized their customers’ and investors’ interest in being an environmentally sustainable 3. Brainstorming
company and has asked their Director of Sustainability to develop goals for absolute reduction in carbon emissions despite the 4. Recommendation
growth they have planned as compared to a “Business As Usual BAU scenario . The CEO expects this to support the
company’s overall sustainability vision, help ensure protection of their brands’ value, and bolster the company’s market Case Evaluation
capitalization. Structure and Framework

Analytical and Problem Solving Ability

Communication and Positive Attitude

Synthesis and Recommendation

197
Case #16: Green Co (2/6)
Exhibit 1: Data Sheet

Table 1 – Company FY11 Data Table 2 – FY15 Growth Goal

Metric FY11 Metric FY15 (Goal)

Company Revenue $10 billion Company Revenue $15 billion

Offices: 20 Offices: 28
Retail: 600 Retail: 900
Locations Locations
Manuf. & Dist.: 50 Manuf. & Dist.: 60
Total: 670 Total: 988

Offices: 0.5
Energy Consumption Retail: 4.0 NPV Calculation
(millions kWh) Manuf. & Dist.: 2.0
Total: 6.5
** CO2-e is the unit measurement for carbon emissions; one can
Energy Spend $65 million
assume that carbon emissions are directly correlated to energy
Carbon Emissions 300,000 metric tons of CO2-e** consumption
** Assume discount rate of 10%

Table 3 - Potential Energy Efficiency

Projects
Annual CO2-e
Project Groupings Energy Efficiency Project(s) CapEx Lifetime
Savings Reductions
140,000
Grouping 1 Offices Lighting & HVAC Retrofits at all Offices $4,000,000 $1,600,000 5 Years
metric tons

Grouping 2
140,000
Manufacturing & Solar Installations & other controls $41,500,000 $4,400,000 Perpetuity
metric tons
Distribution

198
Case #16: Green Co (3/6)
Question 1: Spend & Emissions Interviewer Guidance
Question #1A
Metric FY11 FY15 Forecast
After allowing the candidate to review Exhibit 1, ask:
Offices: 20 Offices: 28
Retail: 600 Retail: 900
Without putting a carbon reduction goals in place, how much money would Locations
Manuf. & Dist.: 50 Manuf. & Dist.: 60
you project the company to spend on energy in FY15? Total: 670 Total: 988

Offices: 0.5 Offices: 0.7

You may remind the interviewee that they have some FY15 data. Energy Consumption Retail: 4.0 Retail: 6.0
A candidate may wish to assume some increase in energy prices, which is (millions kWh) Manuf. & Dist.: 2.0 Manuf. & Dist.: 2.4
Total: 6.5 Total: 9.1
perfectly acceptable. Allow them to assume no price change.
Energy Spend $65 million $91 million

Question #1B Carbon Emissions 300,000 metric tons of CO2-e 420,000 metric tons of CO2-e
Ask the following:

How much will the company emit in FY15?

Push the candidate to calculate the exact number and not round.

199
Case #16: Green Co (4/6)
Question 2: NPV Interviewer Guidance
Question #2

Ask the following:

What is the NPV of the two potential project groupings that the company is
considering implementing? Assume benefits and costs are immediately
realized in FY11.

Ask the candidate for the approach that they would take and write out
the formula. Do not ask them to do the NPV calculation, it will take too
long for the allotted time. Once they write the formula, provide the
information that the PV (cost savings) is $6.7M.
Discount rate is 10% (also on the data sheet).
Investment and payback both happen in FY11.

200
Case #16: Green Co (5/6)
Question 3: Emission Reduction Interviewer Guidance

Question #3A Questions #3A and #3B

Since emissions are directly correlated to energy consumption (as noted in the
Ask the following: data tables) and the cost of energy stays constant:
A 0% increase in absolute emissions would equate to a 0% change in
Relative to the BAU scenario, what are the potential energy consumption. Energy spend would stay at $65 million, resulting in a
savings of $26 million ($91 million - $65 million).
energy cost savings if the company chose to adopt a A 5% reduction in emissions, following the same logic, would equate to a
goal of: 5% reduction in energy consumption (and thus spend). Spend would be
a) 0% absolute increase in emissions from FY11 to reduced by 5% to $61.75 million ($65M * 95%) and thus the savings from
the Business as Usual number is $29.25 million ($91 million - $61.75
FY15 or, million).
b) 5% decrease in emissions from FY11 to FY15?
Being methodical will be critical to this question; there are several variables that
must be addressed in logical order:
Question #3B BAU carbon emissions are forecasted to be 420,000 MT CO2 e .
Which of the two project groupings should Green Co A 5% reduction target would require a 135,000 MT reduction (420,000 MT
pursue to achieve a goal of 5% decrease in emissions? 285,000 MT), which could be accomplished by both project groupings
(140,000 MT each).

The BAU (Business as Usual) scenario, as mentioned in Since both Grouping 1 and 2 offer the same carbon emissions savings potential,
the prompt, is one in which the company implements the candidate should choose the one with the better NPV, which is Grouping 1.
no carbon emission reductions.
In addition to getting the NPV calculation right and getting to a recommended
goal, a great answer would include:
Balancing NPV with the non-financial benefits (i.e., carbon emissions) to
ensure the goal makes sense from a financial and non-financial (e.g.,
stakeholder expectations) perspective.
Benchmarking these goals against those of their peers and competitors in
the marketplace to understand whether these goals will help meet
stakeholder expectations.

201
Case #16: Green Co (6/6)
Brainstorm
Recommendation
Question #4 Green Co should implement the Grouping 1 energy efficiency project
What other factors should the company consider when setting goals and This project has a positive NPV of . M vs Grouping ’s . M
planning for the implementation? It meets the company’s sustainable vision for the future by reducing
carbon emissions by 5%
Key points may include:
Additional financial considerations
Length of availability of tax credits & incentives
Availability of capital (Grouping 2 requires a very large upfront
investment)
Organizational
Internal appetite for adoption of these goals
External stakeholder expectations
Management commitment
Alignment with CEO’s vision
Operational
Creation of an implementation roadmap
Risks and Next Steps
Measurement & verification of results (i.e. cost savings, carbon
emissions reductions) Risks
Does Green Co have the financial means to implement?
Does client have capability to implement project
Forecasts and constant price of energy may be inaccurate

Next Steps
Determine Green Co’s financial position to implement
Examine movement in energy prices
Analyze company’s ability to implement and impact on wider company
operations

202
 Quant Level - MEDIUM

Case #17: GreenShield Health Insurance (1/6) Case Type Industry Client Type

Market Entry / Financial Services

Healthcare Insurer
STRATEGY& - Round 1 – Interviewer Led Market Sizing and Insurance

Fit Questions Interviewer Guidance

1. Describe a time when you led a team through a This is a 3 part case that tests several different skills:
significant change or introduced a new idea during a PART 1: MARKET ATTRACTIVENESS (15 min)
project. Testing: Market Sizing, Breakeven Analysis, other factors
2. Tell me about a time when you failed. PART 2: CHANNEL SELECTION (15 min)
Testing: Grasp of channel economics of client acquisition model, other channel factors
PART 3: PROPOSED RECOMMENDATION (5 min)
Testing: Ability to synthesize conclusions from large amounts of data, identify risks, and respond to challenges

Fit Evaluation
Overall Fit Performance
S1 O1 A1 R1
2 2 2 2

Case Prompt Case Development

Your client is GreenShield Health Insurance, or GHI. They are a health insurance company that wants to expand into 1. Framework
Florida. GHI wants your help creating a business plan for this venture to see if it makes sense to enter this market. 2. Q&A Discussion
3. Final Recommendation
Before allowing the candidate time to write out a framework, have a discussion about the important facets of a
business plan and what one would need to believe to enter this market.
The candidate would ideally touch upon market attractiveness, customer identification, and distribution channels.
For the next portion of the case, guide the candidate through each of the three parts referenced above and allow
Case Evaluation
them to come up with a separate mini-framework for each.
Structure and Framework

Analytical and Problem Solving Ability

Communication and Positive Attitude

Synthesis and Recommendation

203
Case #17: GreenShield Health Insurance (2/6)
Framework Interviewer Guidance
Working hypothesis: The client should expand into the FL market. The candidate should walk the interviewer through their framework. The
interviewer should ask further questions of the candidate, if necessary, to
Health Insurance Market drive a discussion around market potential for the client.
Size If the candidate does not fully flush out their thoughts on the size and segments
# insured by employer associated with the market, probe the candidate further by asking, do you think
# insured by other means v. uninsured that every person who could individually get health insurance (>18 yrs. old) in FL
Customer Segments has health insurance?
Insured v. uninsured If the candidate still struggles to identify different customer segments for the
Ability to afford insurance market, prompt them by saying, what are some reasons that a person may not
Satisfaction with current plan have insurance?
Competition
Other health insurance companies
State-run health exchange
Channels
Direct (mail, calls, agents) v. indirect (internet, billboard)
Growth Rate

Profitability
Revenue
Price per policy
Volume-# potential policies issued
Costs
Fixed costs-initial investment
Variable costs-per policy issued (admin, etc.), salesforce,
marketing

Company (GHI)
Fit with current portfolio of customers (by state)
FL insurance regulation concerns
Changes to existing insurance laws (e.g. ACA)

204
Case #17: GreenShield Health Insurance (3/6)
Part 1: Market Attractiveness Part 2: Channel Selection
1. Ask the candidate how they would estimate market size (e.g. what data would 1. The candidate should begin with a brief discussion of their framework for
be necessary, how they would use that data, etc.). addressing the issue of channel selection (having been previously completed).
Below are relevant questions that the candidate should ask to arrive at an
After this discussion, show Exhibit 1 (cover Exhibit 2) and ask the appropriate solution.
candidate to react. No calculations are necessary, but the candidate should
have already cited several of the factors in the exhibit during the 1. How is insurance sold?
discussion. Discuss direct (calling customers, direct mail, agents) and indirect models
(internet, billboard).
2. Ask the candidate to determine the breakeven criteria and formula, given the 2. Where do the sales come from?
following information (show Exhibit 2): Discuss leads. Specifically, the candidate should identify that direct models
Investment Required $2,000,000 will likely generate far higher leads than indirect models, but are probably
also more costly.
Revenue per policy = $500 After the candidate identifies channel differences in lead generation, show
Medical Cost per policy = $350 Exhibit 3 and allow them to react. A strong candidate may dive into
calculating the most attractive sales channels.
Admin Cost per policy = $100
The candidate should easily calculate the contribution margin per policy 1. Ask the candidate to explain differences between yield percentages and look
($50). As a result, 40,000 policies need to be sold to cover the 2M for a coherent response (e.g. secondary and tertiary insights are given, a
relationship to self and knowledge of how effective each channel is personally
investment. Assume all costs and revenues are over the lifetime of the may be explained, etc.).
customer.
1. Ask the candidate to identify the most attractive sales channel and which
resulting model is best (e.g. direct v. indirect).
3. Next, using Exhibits 1 and 2, ask the candidate to calculate the share of the The profit calculation for each channel is as follows:
current market the firm would need to capture to breakeven: Total Revenue-Total Cost = ((# of leads) * (% yield) * (revenue per sale)) ((#
(40,000 policies) / (4,800,000)= 0.8% of leads) * (cost per lead))
Note: Use number of insured, not target market. The candidate should
identify that this is a realistic market share target. Result:
Internet - $75K
Direct Mail - $100K
Call Center - $200K
Billboard - $0
Agent - $1,950K

The candidate should identify that direct sales models are best and that
using agents, call centers, and direct mail are the best channels for selling
insurance.

205
Case #17: GreenShield Health Insurance (4/6)
Exhibit 1: Market Sizing Exhibit 2: Breakeven Analysis

Market Estimation
Florida population 17,000,000
Over 18 yrs. old 12,000,000
Not covered by employer, % 50%
Breakeven Analysis
Not covered by employer, amt 6,000,000
Currently Insured, % 80% Upfront Investment $ 2,000,000
Currently Insured, amt 4,800,000
Revenue Per Policy $ 500
Uninsured, % 20%
Uninsured, amt 1,200,000 Medical Cost Per Policy $ 350
Uninsured, can afford 30% Administrative Cost Per Policy $ 100
Uninsured, can afford 360,000
Insured but unhappy 30%
Unhappy, amt 1,440,000
Total Target Audience 1,800,000

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Case #17: GreenShield Health Insurance (5/6)
Exhibit 3: Channel Selection

Lead Generation by Channel

Internet Direct Mail Call Center Billboard Agents

Cost Per Lead 25 15 30 10 30

Number of Leads 1,000 20,000 10,000 500 10,000

Yield 10% 2% 5% 1% 30%

Revenue Per Sale 1000 1000 1000 1000 750

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Case #17: GreenShield Health Insurance (6/6)
Part 3: Recommendation Risks and Next Steps
The client company should enter the Florida insurance market Risks
Based on the upfront investment necessary, the client only needs to capture 0.8% The Florida market may look attractive now, but we do not have any information
of the insured market to breakeven on market trends
The direct channels are the most profitable and, as such, the client company We do not know about our client’s existing direct sales capabilities e.g., do they
should leverage these starting with agents first already employ agents and have expertise in this area?)
We are not sure if the direct channels will best address the market segments the
client hopes to target in Florida

Next Steps
Conduct further market research to best understand trends in the FL health
insurance market over time
Create plan for build out of client salesforce (agents) and training specific to the FL
health insurance market
Determine how the client’s target customer responds to marketing by sales
channel to refine lead generation model

208
 Quant Level - MEDIUM

Case #18: Hawaiian Smoothies (1/5) Case Type Industry Client Type

Restaurants, Food &

Market Entry Investor
BCG – Round 2 – Candidate Led Beverage

Fit Questions Interviewer Guidance

1. Tell me about a time you struggled as a leader. If you This is a breakeven problem. The candidate should draw out a framework and explore the major
could redo everything, what would you change? business aspects of opening the smoothie store. This case is candidate-led, so push the
2. Tell me about a time you persuaded someone who candidate to drive the case. Only provide information when it is specifically requested.
initially disagreed with you. What was the
disagreement, what did you do, and what was the If asked about timing, respond, “Jim plans to open the store as soon as he finds a co-investor”.
result?
If asked about payback period or Dan’s investment objectives, respond, “Dan would only invest
if the payback period is within two years. He’s also interested in the longer-term prospects and
Fit Evaluation growth potential of selling smoothies”.
Overall Fit Performance
S1 O1 A1 R1
2 2 2 2

Case Prompt Case Development

It is the year 1990. Your client, Dan, was approached by an entrepreneur, Jim, who wanted to discuss the possibility of 1. Framework
Dan investing in one of his ideas. Jim has a history of successfully launching new business ideas, but Dan is not sure 2. Analysis of OpEx
whether to invest. 3. Analysis of Revenues
4. Calculation of BEP and profits
The idea Jim is proposing is to open a new “smoothie shop, a type of drink he saw when he was recently in Hawaii. He 5. Recommendation
thinks that smoothies could be a big business and he wants to get the first store opened up soon so that he can start
rolling out franchises if they are successful. Jim has asked Dan to invest $30,000 in the concept, for which he will get a
Case Evaluation
50% ownership stake in the business. As a result of his 50% ownership stake, he will receive 50% of the profit or loss
Structure and Framework
generated by the business.
Analytical and Problem Solving Ability
Dan wants to know what you think he should consider when deciding whether to invest.
Communication and Positive Attitude

Synthesis and Recommendation

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Case #18: Hawaiian Smoothies (2/5)
Framework Interviewer Guidance
Working hypothesis: Dan should invest in the new smoothie store. Did the candidate state a hypothesis?
The candidate should express the core idea that they would like to test through
Breakeven in 2 years? their analysis. They should clearly demonstrate how the questions they’re asking
Revenues
Volume of smoothie sales are directed at answering the specific question of whether Dan should invest in
Price of smoothies
Product mix & other sales the smoothie store.
Costs It’s less important for the hypothesis to be backed up with evidence, since it’s so
Fixed
Real estate & store footprint early in the case (though strong candidates will draw on their own knowledge and
Equipment for food prep
Advertising & marketing intuitions to develop preliminary insights about the potential for this new
Variable smoothie store).
Raw materials: fruit, add-ins
Store Employees
Is breakeven the primary consideration? Are external factors considered?
Breakeven is the deciding factor for Dan. It’s OK for candidates to discuss other
Positive market response?
considerations, but their primary focus should be on profitability.
Smoothie Market
Demand from consumers
Growth potential & franchising
Consumer tastes/preferences Is the framework case-specific?
Competition Excellent frameworks will explore specific aspects of the smoothie market, rather
New smoothie competitors than just generic ideas about new market entry.
Response from existing food & beverage stores

Case Development
This case is deliberately open-ended after the framework, the candidate can start by analyzing either revenue or costs. After analyzing both, the candidate
should evaluate the profits and breakeven potential (i.e., whether or not the initial investment can be recovered, and how long it will take if so).

210
Case #18: Hawaiian Smoothies (3/5)
Costs: Fixed & Variable Revenues
FC Store hours: 11am 9pm
Real Estate the store will be located in a suburban strip mall. Open days: 360 days per year (30 days per month)
Rent will cost $7,200/month. Price: $5 per smoothie, only one size
The candidate should convert to day rates ($240/day). Sales: 15 smoothies per hour, on average
Equipment juicers, cash registers, freezers, refrigerators.
Equipment will cost $20,000 at the outset, and it will have to be repaid at the Computations:
end of the first year. Smoothies sold per day: 15 smoothies/hour * 10 hours = 150 smoothies/day
Advertising and marketing print ads, mailers, radio spots, promotions. Employee cost per day: 10 hours * 2 employees * $6/hr. = $120/day
Advertising and marketing will cost $10,800/year. Total cost to run the store per day: $240 rent + $120 employees + $30 advertising =
The candidate should convert to price/day ($30/day). $390 per day
VC
Employees two employees, likely high-school or college age kids making Profit margin per smoothie: $5 - $1.50 = $3.50 (excl. investment)
the minimum wage in 1990. Profit per day: ($3.50 profit margin * 150 smoothies) $390 = $135 profit/day (excl.
Employees will cost $6/hr. each. investment)
Raw materials fruits, milk, juices, add-ins. Total yearly profits: $135 * 360 days = $48,600 (excl. investment)
Raw materials will cost of $1.50 per smoothie.

Interviewer Guidance
Do not provide information if the candidate simply asks, “Do we have any information on the expected revenues/costs/profits?”. Push the candidate to think
deeper and identify the major business drivers behind revenues and costs. Respond, “What do you think the major revenues/costs would be?”

Strong candidates will proactively describe item in-depth e.g. rather than just saying “equipment as a cost, they will describe the types of equipment), make
inferences about figures, and evaluate the reasonability of figures provided to them.

If the candidate is missing information when calculating breakeven, ask them whether they might be missing anything.

211
Case #18: Hawaiian Smoothies (4/5)
Math Extension: Optional Brainstorm
For an optional math extension, ask, “The store is not entirely sure that it will After the candidate has completed the breakeven analysis, ask, “What are
be able to sell 15 smoothies per hour. What is the minimum number of some other ways the store could increase revenue?”
smoothies the store must sell to breakeven on a daily basis?”
The candidate should structure their response:
Total cost to run the store per day: $390 Open for additional hours and serve “breakfast smoothies
Total profit margin per smoothie: $3.50 Sell food items or other beverages
Total number of smoothies needed to breakeven per day: $390 / $3.50 = Add premium drinks with “boosters
~111 or ~11 per hour Sell athletic supplements
Strong candidates will recognize that 11 is a reasonable amount as that is Enter into partnerships with local gyms
about one every 5-6 minutes. Franchise the stores
Raise prices

Once the candidate has completed the brainstorming, ask for the final
recommendation for Dan.

Key Insights
The candidate should remember that at the end of the first year, Jim and Dan will have to repay the $20,000 in equipment costs. This means that first year
profits will only be $28,600.
Candidate should recognize that Dan will receive 50% of the returns from the store: $14,300 in the first year and $24,300 per year, starting in the second
year, and continuing every year after that. Therefore, Dan will recover his investment during the second year.

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Case #18: Hawaiian Smoothies (5/5)
Risks
Recommendation
Dan should invest in Hawaiian Smoothies Bad economy or faulty assumptions could adversely affect estimates and
Dan should recover his $30k investment during the first half of the revenues could be lower than projected
second year Food and beverage competitors could introduce smoothies, since it’s a
Dan should earn $24,300 annually on an on-going basis from the simple product to make, cutting into Jim’s profits
investment
The store only requires ~11 smoothies/day for breakeven on daily
expenses, but we expect to sell 15 smoothies/day
Comments:
1. For profitability case, framework should start with profit, and then market, risk etc. And go back to the money bucket asking
interviewer whether we get information on revenue?
2. BGOT model: for business, it’s better to incorporate real life example “Is this smoothy shop running in a model like jumba juice?”
3. Before walking over the framework, START WITH HYPOTHESIS
4. Break even point= total cost/ margin per product
5. Even for additional ideas, we should bucket the ideas into certain groups:
e.g. revenue based ideas, cost based ideas
Next Steps
short term, long term
low risks, high risks Examine other ways to increase revenues, such as:
Open for breakfast and serve breakfast smoothies
Attract health-conscientious and potentially higher margin customers
by serving athletic supplement-boosted and/or healthy smoothies
Increase size offerings small, medium, large etc.
Examine possible competitive response and gain first mover advantage

213
 Quant level- LIGHT

Case #19: Heavy Attrition (1/4) Case Type Industry Client Type

Organizational Medical Device

Healthcare
Z.S. ASSOCIATES – Round 2 – Candidate Led Change Company

Fit Questions Interviewer Guidance

1. Describe your leadership style and give me an example This is an open-ended case that focuses on brainstorming and forming a hypothesis. It is
of a time when you demonstrated it. indicative of the type of case typically provided by partners, and could even be performed
2. Tell me why you are specifically interested in our Firm without pen and paper if asked to do so.
and the city / office for which you are applying.
An excellent candidate should be able to quickly distinguish what factors are key to focus on (i.e.
those in the framework) based on the background information provided, and should also be
able to provide a clear structure to an otherwise ambiguous case.

Fit Evaluation
Overall Fit Performance
S1 O1 A1 R1
2 2 2 2

Case Prompt Case Development

Our client has asked us to look into why there is such heavy attrition amongst the junior sales people in the 1. Framework
organization. Where do you think we should start? 2. Discussion/ Q&A
3. Recommendation
Let the candidate drive the case. The candidate should ask clarifying questions around the qualitative “heavy
attrition verbiage.

When asked, reveal the following:

Case Evaluation
The average time a newly hired salesperson stays in the organization is less than one year. This is worrisome
Structure and Framework
because it takes about 6 months for a new salesperson to learn how to do their job well and get up to speed.
On the other hand, experienced salespersons (people who have been with the organization greater than 3 years)
Analytical and Problem Solving Ability
have almost no attrition.
The organization is a fairly new medical devices company that has been operating for 10 years.
Communication and Positive Attitude

Synthesis and Recommendation

214
Case #19: Heavy Attrition (2/4)
Framework

Increase retention through an improved incentive scheme

Attrition not caused by poor performance Work conditions similar across all employees Are there differences in incentive schemes?

% of company driven leaves (layoffs) Working conditions of people working less than Base and variable salary differences (sales
Satisfaction with work environment among and over 3 years people)
employees Working hours Commission by sales volume; distance
Is avg. attrition in the market lower? Type of work traveled
Any competitor or new market player hiring Location How does split compare to competition?
sales people? Insurance Financial vs non-financial incentives
Industry exams needed after 1y? Maternity / paternity leaves, additional benefits
Expense coverage
Working hypothesis: The heavy attrition is due to the incentive structure of the client. I would like
to begin by examining differences in the incentive structure for junior and senior employees.

Interviewer Guidance
The ideal candidate should be quick to hypothesize that there seems to be an incentive problem. As a result, while the framework may have a bucket addressing
additional factors (i.e. industry regulations or exams, barriers from pre-existing relationships, etc.) it should primarily examine different types of incentives and how these
compare between new and experienced sales representatives.
Incentives could include the type of work, compensation, perks, etc.; however, since the primary work of sales people is to sell, we can assume that the nature of work is
similar between both types of sales people. Thus, we focus on the monetary aspects of the incentive structure.
Sales people are typically paid a small fixed salary and a commission which is based off the sales they accomplish. Thus, commission for a sales person is a function of:
Volume sold (type of clients, type of product sold)
Distance traveled for each sale

For the remainder of the case, the candidate should look to investigate how and why the commission varies between the junior and senior sales people with regards to
each of the above factors.

215
Case #19: Heavy Attrition (3/4)
Brainstorm
Ask the candidate: “Assuming there are no significant differences between the tasks of junior and senior sales people, what do you believe would be the main factors
determining incentives obtained?” A good candidate should present at least 3 headlines (buckets) to create an efficient incentive scheme. The following three headlines are
examples. Sub-topics should be discusses in detail. If the candidate does not do this, follow-up by asking what the most important issues to analyze first are a good
candidate will do this without additional questions needed.

Type of client in the territory Distance to customer location

Type of product sold

Margins of each product? Incentive adjustment according to territory potential? Incentives adjusted to distance to customer?
Effort to sell? How territories are assigned? What is the average distance for each client on customer
Can junior sales people sell every product? Best clients / territories assigned to senior people? portfolios?

Typically sales people are assigned territories so they don’t

The candidate should show an understanding that it is
have to compete with one another for the same customers. A salesperson’s commissions could be heavily impacted if
important if the company sells multiple products of differing
their customers are geographically separated by large
commissions and price ranges and if the junior salespeople The candidate should want to know how territories are distances and they are forced to spend relatively more time
do not have access to the entire range of products. assigned. If it is based on geography, there could be a on the road traveling than with customers.
For example: Apple iPods priced in the $100-300 range problem if junior salespeople are provided lower income
practically sell themselves, i.e. they require little effort on neighborhoods, while senior salespeople command coveted This problem could be compounded if the junior salespersons
the part of the salesperson. iMacs, on the other hand, are higher-income neighborhoods (potentially skewed are getting new potential customers who are far from each
priced in the $2000-3000 range and require a greater compensation). other.
effort to sell.
On the other hand, territories could be based on industries of
customers. For example, a few sales people sell to higher
The candidate should investigate whether the incentives are
education, a few sell to businesses, a few to retail, etc. If the
aligned with the effort required to make a sale, such as
junior sales people are assigned to a client-group where they
having a higher commission for an iMac than an iPod in the have to acquire new customers or where customers aren’t
example above. familiar with the product, it could negatively impact their
compensation.
If the commissions are structured as above, the candidate
should investigate whether junior salespeople are allowed to Another issue could be that typically high volume customers
sell higher margin, higher commission products or whether for the firm are earmarked to be serviced by the senior sales
they are forced to sell only the lower-priced end of the team. This setup would inflate commission of the senior sales
product line. Improper incentives could lead to lower morale team to the detriment of junior members who are not able to
experience the benefits of bigger clients or to build
among junior sales people and motivate them to leave
relationships with them.
quickly.

216
Case #19: Heavy Attrition (4/4)
Recommendation

As a final question to the candidate, ask them for their recommendation.

The interviewee should prioritize one of the factors discussed previously and provide their rationale for doing so (the rationale matters more than
which factor is selected).
They should also include some suggestions like the ones listed in the sample recommendation, and should be rewarded for creative ideas.

Recommendation
The client should review the incentive scheme for junior employees, namely by:
Analyzing the type of products sold by different sales levels, as this is likely to have the greatest impact on sales commission
Reviewing any adjustments required to even out sales effort among territories
Compensating for differences in average distances to clients

Risks Next steps

Increases in attrition among senior employees Include senior employees in the decision making process / committee
Other factors might be creating the attrition problem Investigate the main attrition caused through a survey to junior sales
Fairer incentives not enough to compete on the labor market people
Analyze competition and market best practices regarding
compensation

Evaluation
As mentioned before, this case focuses on the candidate’s ability to brainstorm. A good candidate will provide thoughtful reasoning about buckets and
sub-bullets, making sure to have a MECE approach.
It is also important to drive the case and prioritize topics in order of importance after each brainstorming question. Additionally, the candidate should
keep using the same ideas across questions to show confidence in the reasoning presented before.

217
 Quant Level – LIGHT

Case #20: International Airlines (1/6) Case Type Industry Client Type

Profitability Transportation International Airline

BAIN & COMPANY – Round 1 – Candidate Led

Fit Questions Interviewer Guidance

1. Of what experience on your resume are you most This is a profitability case. The candidate should draw out a framework outlining the possible
proud? issues and then use it to ask exploratory questions. Ensure the candidate understands the airline
2. How have you used analysis to guide your decisions? business model before proceeding.

Fit Evaluation
Overall Fit Performance
S1 O1 A1 R1
2 2 2 2

Case Prompt Case Development

One of our clients, a leading international airline, has come to Bain with a problem. Over the last three years they have 1. Framework
noticed that while their business has been doing well, their profitability seems to be stagnant. They have come to Bain
to try to determine what the issue is and how they can correct the problem. 2. Analysis of Freight
3. Profitability evaluation
Framework:
4. Recommendation
This is a classic profitability case, so a framework considering external factors (i.e. state of the airline industry,
competitive landscape) and internal factors (i.e. revenue streams, costs) is appropriate. The framework should be
Case Evaluation
industry specific.
Structure and Framework

Additional Information (to provide during discussion with the candidate):

Analytical and Problem Solving Ability
The airline has two main lines of business: passenger and freight. Provide Exhibit 1 only when asked about business
segments (product mix or profit trends). The firm operates globally.
Communication and Positive Attitude

Synthesis and Recommendation

218
Case #20: International Airlines (2/6)
Framework

Increase profitability by optimizing usage on freighter flights

This is not a market wide trend Profitability is decreasing due to freight business Freight business can be improved

Clients Revenues Major cost item can be improved making

Market size Product-mix profitability grow
Overall growth trends Passengers Investment needed to make the change is more
Demographic / client-mix changes $revenue / mile traveled ratio than compensated by the upside (NPV, ROIC, BE
Competition Costs analysis)
Same profitability trend? Capacity utilization Special customer needs that make adjustments
New competitors in the market? Fuel costs impossible (service levels)
Innovation and trends Maintenance Any long-term commitments?
Alternative transportation developments Personnel Re-sell capacity
affecting business (Uber, faster trains, etc.) Insurance

Working hypothesis: The client is experiencing decreases in profitability due to the freight business. I would like to
begin by analyzing trends in the profitability of this business segment over the past several years.

Interviewer Guidance

Note that this is a Bain Co case and the candidate should start with an “Answer First approach. The answer provided
might be different as long as the supporting facts below are MECE and able to redirect the candidate to the correct analysis.
The ideal candidate should be quick to hypothesize about the recovery of one of the business segments. If clarifying
questions and answers already indicate there is a freight problem, the hypothesis should be related to freight flights.
If the candidate did not take an answer first approach, the framework should include buckets associated with the market
(size, customers and competitors), client profitability (detailed revenues and costs, airline specific, references to product
mix) and execution (regulation, decision making, ability and client capabilities).

219
Case #20: International Airlines (3/6)
Exhibit 1: Segments

Revenue and Profit by Business Segment

220
Case #20: International Airlines (4/6)
Details About Freight Key Takeaways
Let the candidate walk you through the data. There might be a problem with the usage of freighter and passenger jets to carry
the freight.
Provide the following information once candidate identifies freight as an issue:
Belly freight is a substitute for freighters themselves.
There are two main types of freight: belly freight, which is carried in the bays of
the planes that are operating as passenger jets, and freighter freight, which is Candidate should now ask for some information about the profitability of belly
carried on specially-designed freighters. freight versus freighter freight.
With the exception of live animal freight, which is an inconsequential portion of
this airline’s overall business, all types of freight can be carried on either
freighters or passenger planes.
Passenger planes typically have about 35% of the room for freight as compared
to freighters.

Key Data Additional Details

Provide the following once asked about belly versus freighter freight profitability. International Airlines has quadrupled their number of freighters from 3 to 12
This box gives details on costs, then move to usage in the Additional Details box. over the past 3 years. Further they have added new freighter flights. This has led
Revenues are included in Exhibit 2 (next page) and should be shown to candidate to the usage of the freighters’ capacity on each flight to drop from to .
last.
At the same time, the number of passenger flights has doubled and the number
The cost per ton of belly freight (i.e. the incremental cost to the airline) is
of destinations served via passenger flights has increased by 1/3. Belly freight
approximately 20% that of freighter freight.
capacity usage however has dropped from 85% to 60%.
The time to deliver belly freight is approximately 10% longer than that of freighter
freight.
The destinations served are actually greater with belly freight flights than with
freighter freight.
They operate out of the same airports, although separate personnel are required
to operate freighter freight flights.
If belly freight or freighter freight capacity goes unoccupied, it’s non-revenue
generating (i.e. nothing else is carried in that space).

221
Case #20: International Airlines (5/6)
Exhibit 2: Profits

The total cost for a freighter freight flight averages $400,000 per flight and for passenger flights they are $600,000 (regardless of the freight carried). Further,
revenues for each flight from the freight move on a sliding scale based upon how full the planes are.

Revenue By Freight Usage

222
Case #20: International Airlines (6/6)
Recommendation
Synthesis of Issues
Due to the unnecessary freighter expansion project, the airline is Examples:
making $280K per freighter flight down from $680K. As a result, it is
now losing $120k per flight versus a profit of $280k per flight. Use passenger flights’ available freight capacity to serve current freight
business and study the sale of freight business
$800K * (85%) = $680K $800K * (35%) = $280K Sell available capacity to competition
$400K cost per freighter flight: Supporting factors:
Freight business losing $120k per flight
Before: $680K - $400K = $280K profit
Passenger flights at 60% capacity on belly freight
Current: $400K - $280K = $120K loss per freighter flight Belly freight costs only 20% of that of freighter flights
Much of this freight could be carried in the belly of the planes and
would result in a cost free incremental profit to the airline.
It can consider trimming its freighter operations to lower facility /
personnel costs.
It can consider entering into agreements with other freighter Risks and Next Steps
companies in order to share usage of planes and personnel in an
effort to cut costs / maximize usage. Risks
The airline could try and become a leader in the express freighting Can the company cover the same routes?
business. Further reduction in use of freighter and passenger flight capacity
Expensive and risky to try and become a leader in the express freighting
business
Evaluation:
A good candidate takes an answer first approach with MECE
supporting factors. Additionally, specially for this case, the candidate Next Steps
should clarify the business model of the firm, namely regarding Analyze need to reduce number of routes to return to profitable freighter
product mix. The candidate should also be able to understand the flights while maximizing usage of passenger freight to increase profit
math and provide the conclusion that the firm is losing $120k / freight
flight without any support from the interviewer. Review any possible contractual constraint on selling / divesting from
freight
Analyze spin-off opportunities for freight business (business valuation)

223
 Quant Level – MEDIUM

Case #21: Katrina (1/4) Case Type Industry Client Type

Non-traditional Non-profit/
School System
BCG – Round 1 – Candidate Led Problem Education

Fit Questions Interviewer Guidance

1. Tell me about a time when you did not meet a goal. This case provides a good balance between quantitative and qualitative reasoning skills, and also
How how did you overcome / respond to this? introduces a new perspective and set of client goals for the candidate to consider that differ
2. What are three adjectives your coworkers would use to from the typical business profitability model.
describe you?
The objective of this case is to see if the candidate can break down a problem statement to
analyze the different causes that might be contributing to the issue at hand.

Fit Evaluation
Overall Fit Performance
S1 O1 A1 R1
2 2 2 2

Case Prompt Case Development

Our client is a school district in New Orleans that has been completely devastated by Hurricane Katrina. After the 1. Framework/ Q&A
hurricane, they saw most of their students leave and relocate to nearby states. Two years into the disaster, students
are slowly returning. The school district has hired us to advise them on two things: 2. Quantitative discussion
1) How many schools do they need to reopen within the next couple of months? 3. Qualitative discussion
2) What can be done to improve the quality of education?
4. Final recommendation
Additional information (to be provided if candidate asks):
Case Evaluation
Before Hurricane Katrina, New Orleans Public Schools ranked as one of the lowest performing school districts in the
Structure and Framework
country. The district faced significant financial problems and was on the verge of bankruptcy.
There were 64,000 students displaced due to the hurricane, and 64 schools before the hurricane struck. Since then,
Analytical and Problem Solving Ability
18 have been reopened.
Approximately 24,000 students have already returned to the state and about 1,600 students are returning every
Communication and Positive Attitude
month.
Before the hurricane, the school district statistics were the following:
For every 10 students who enrolled in schools, fewer than 6 made it to graduation. Synthesis and Recommendation

Of those graduating, only 2 enroll in college.

224
Case #21: Katrina (2/4)
Framework

Improve New Orleans school system

Number of schools needed in 2 months Improve quality of education

Number of students Quality of teachers

Students who did not leave during Katrina Incentives to teach in New Orleans (pay, non-financial benefits)

Current number of returned students Hiring criteria, national recruitment program

Additional students over the next 2 months Coaching & leadership development programs

Return rate of students to New Orleans Curriculum development, learning standards (district, state,
national)
Increases in students from other states due to natural
disasters nearby (TX, FL) School environment

Capacity per school Leadership and administration

Goal: Pre-Katrina level? (1000 students per school) Higher? Safety, building quality & welcoming atmosphere

Current socioeconomic needs of students: health & emotional supports

Transition statement: I would like to begin by analyzing the expected change in student population
over the next two months. Then, assess the highest lever areas to improve the quality of education.
Interviewer Guidance
The candidate should build a high-level framework that addresses both questions: 1) number of schools to open and 2) how to improve the quality of
education.
If the candidate does not address the quality issue, ask a specific question (Q2) after solving for the math for schools needed.
A good candidate will present a hypothesis and / or potential solutions while walking the interviewer through the framework.

225
Case #21: Katrina (3/4)
Question 1 Question 2
How many schools does the district need to reopen by the end of next What can be done to improve the quality of education?

month? Interviewer guidance:

The below answers are just ideas. The objective of this exercise is to see if the candidate can break
From their framework, the candidate should suggest that identifying the down a problem statement to analyze the different causes that might be creating the problem. This
change in student population to determine the number of schools to open should be a structured brainstorm.
is the starting point for this case. The candidate and interviewer should go Teachers & Curriculum
through the math below to answer question one. Attract, develop and retain quality teachers.

Note: The information required to answer this question is given on slide 1. If Provide incentive structures (teacher pay, non-financial incentives)

this was not already given to the candidate, it should be told to the Additional support in curriculum development; coaching and leadership development programs
Engage students better by catering to subjects that are more pertinent to today’s world. For
candidate now.
example, courses like computer education could give students an edge getting jobs in high-paying
Calculations: sectors. Also, offering education in practical areas like carpentry, masonry, nursing etc. could
Formerly, 64 schools with 64,000 students, so 1,000 students per school. translate directly into local jobs.
Benchmark best practices with other school districts and state and national standards.
18 schools have reopened already. School Environment
18 * 1,000 = 18,000 students can currently be accommodated. Attract, develop and retain quality principals and administrators.
Improve the student teacher ratio to allow for more individual attention while ensuring adequate
Number of students who have returned to New Orleans = 24,000.
capacity in the schools.
Shortfall in capacity: 24,000 18,000 = 6,000 students. Experiment with new school models by setting up a charter system allowing involvement of private
groups and corporations.
Every month, 1,600 students return.
Grant some amount of autonomy to the schools in exchange for increased accountability,
By next month, there will be a shortfall of 6,000 + 2*1,600 (current encouraging sharper focus on student achievement. This could also provide an incentive for schools
month + next month) = 9,200 students. to find creative ways to decrease spending in administration and instead invest the money in
instruction.
Thus, by end of next month, the school district should target to reopen 10 Community
new schools with a capacity of 1,000 students each to accommodate Get the community involved, including parental involvement in school activities, which would be
9,200 students. particularly helpful during the rebuilding period.
Advertise changes currently being implemented to facilitate community understanding and buy-in.
Beyond that, the school district would need to open ~2 schools per
Get local and national non-profit and/or corporate involvement. This will allow for additional
month to accommodate the 1,600 students returning every month.
funding to achieve goals.

226
Case #21: Katrina (4/4)
Recommendation Evaluation
The school district should: A basic answer will demonstrate an understanding of:
Immediately open 10 more schools, and 2 more each month going forward Numeric calculations required to achieve capacity requirements.
Utilize earlier brainstorming ideas to ensure improvement of school quality
during re-openings Importance of focusing on the quality of the schools instead of just the
number being opened.
Supporting factors: Specific ways to increase quality should be mentioned, such as
Schools are currently over capacity (>1,000 students on average) developing more practical curriculum or focusing on attracting and
More incoming students every month (1,600) retaining higher-quality teachers.
Need to increase teaching quality

Excellent candidates will also:

Demonstrate an understanding of the risks associated with these goals and
suggest ways to mitigate them.
For example:
Risks and Next Steps Media portrayal is a risk because they might focus on the negatives,
Risks especially if the schools cannot provide adequate capacity quickly
Fewer incoming students than expected and negative press related to enough for the returning student body. In that case, students may be
quality of school openings dissuaded from returning, causing even more harm to the school
Lack of funding to carry out goals district. Forging relationships with the media to cover advancements
Further decline in quality due to hurried pace of school re-openings and achievements of the schools would be a way to mitigate the risk,
and could even be turned into a plus by providing a venue to ask for
Next Steps additional funding.
Develop marketing campaign (e.g. with local media) to show school For a community rebuilding itself, costs can be a constraint. However, it
opening and quality to attract students can be also viewed as an opportunity to get endowments to fund new
Use additional exposure as a venue to request more funding (ex. from plans, especially while public awareness and support for the disaster
endowments, foundations, charities and donors) relief is high.
Focus on attracting / retaining better teachers, using industry best
practices when developing school models and setting student-teacher
ratios

227
 Quant Level – MEDIUM

Case #22: Brand Builders Inc. (1/6) Case Type Industry Client Type

Cost benchmarking/
Profit margins/ Consumer Products Retailer
Bain – Round 1 – Candidate Driven
Portfolio mgmt.

Fit Questions Interviewer Guidance

1. Tell me about a leader or role model in your life. Why The candidate should realize that this problem is a revenue growth or cost cutting problem, and
do you admire them? What lessons have you learned that there are several ways to approach it
from them? What is a recent example of you applying
those lessons? As candidate lays out their framework, interviewer should guide candidate towards examining
2. Tell me about a time you had to pivot your initial brand level revenue, growth rate, and margin
approach. How did you go about it?
If the candidate asks about timeframe, respond, “the client is looking to make a decision as soon
as possible.”
Fit Evaluation
Overall Fit Performance
S1 O1 A1 R1
2 2 2 2

Case Prompt Case Development

Apparel manufacturer, Brand Builders Inc., owns a portfolio of apparel brands. Historic growth has been in line with 1. Framework
market. Management wants to invest to drive growth. How should management select brands for investment? 2. Discussion/Q&A
3. Net Present Value analysis
If candidate asks: success will be measured by increasing profitability, but there is no specific target. Ideally the client
will ensure profitability among all brands but will focus on the brands that ensure largest dollar gain in profitability. 4. Investment decision
5. Final recommendation
Case Evaluation
Structure and Framework

Analytical and Problem Solving Ability

Communication and Positive Attitude

Synthesis and Recommendation

228
Case #22: Brand Builders Inc. (2/6)
Framework Interviewer Guidance
Working hypothesis: Management should prioritize its largest, fastest growing Did the candidate state a hypothesis?
brands to invest in and see if there is an opportunity to reduce costs The candidate should express the core idea that they would like to test
Considering the brand portfolio think about size, growth, and profitability through their analysis. They should clearly demonstrate how the
Brand size questions they’re asking are directed at answering the specific question
Brand revenue of which brands to invest in.
Brand market share It’s less important for the hypothesis to be backed up with evidence,
but strong candidates will have intuition around investing in brands
Geographic/international exposure
that are most profitable or most apt to grow based on the market
environment
Brand growth potential
Brand growth rates (historical and projected)
Candidate should suggest an area to dive into (competition, brand
Market growth rates profitability, brand growth, brand revenue, etc.). Interviewer should offer
Competition within each market exhibit 1 and exhibit 2 that contain information on revenue and market
Manufacturing capabilities growth rates

Brand profitability Exhibits 1 and 2:

Consumer preferences Candidate should quickly conclude that without margin, we do not
Manufacturing costs know which brand to invest in, but should note which brands have
Potential economies of scale higher growth rates and more revenue
Overall conclusion: Candidate should realize that there are several
Cannibalization/Synergies
brands, and we could likely invest in any of them, but we should
choose to look more closely at the brands that are the largest
revenue-generating brands and fastest growing, as they will likely
lead to the highest profit in dollar terms.
Note: a larger brand with lower growth rate still can lead to
higher dollar value in profitability because it is growing off a
larger base
Candidate should ask if we have any more information on brands B, E,
H, K, and M. If candidate does not get to this conclusion, interviewer
should ask them to identify the five largest brands and think about why
we might want to focus on those brands

229
Case #22: Brand Builders Inc. (3/6)
Exhibit 1 Exhibit 2

Revenue By Brand Market Growth Rates

230
Case #22: Brand Builders Inc. (4/6)
Interviewer Guidance: Exhibit 3 Exhibit 3
Interviewer should present Exhibit 3 after candidate has asked about Financials for Selected Brands
margins for the five largest brands: B, E, H, K, M

Candidate should clear chart, recognizing that all brands have relatively
healthy margins except for brand E, which is not profitable. Candidate
should identify that there is no singular driver that is creating negative
margin

Interviewer should agree and ask, “What strategic questions would you
need to ask to better assess whether E should be invested in?”

Candidate should ask for time to brainstorm. An example brainstorm is

below:

Internal External
Do customers like our brand?
What is our market share?
Are we cannibalizing ourselves
Revenues with other brands in the
Is there a competitor
undercutting us on price?
portfolio?
Where can we cut costs in the Can we benchmark our costs
Costs manufacturing process? against competitors or against
Could we outsource? our other brands?

231
Case #22: Brand Builders Inc. (5/6)
Interviewer Guidance: Math Interviewer Guidance: Math
If candidate does not suggest benchmarking, Interviewer should guide For Interviewer Only (ask candidate to compute math)
candidate to benchmark against a contemporary brand (B) and a classic
brand (K), noting that we do not have competitor data, but that other
brands serve as a proxy

Candidate should benchmark as a percentage of revenue. Interviewer

should guide candidate to take the lowest percentage of revenue across the
other two brands as a reference for what E can achieve, and recalc la e E s
cost savings AND new profitability assuming these lower costs.

Candidate should conclude that E could save $6M and achieve 20%
profitability
A great candidate will then ask the “so what. Why if they can
achieve this type of profitability on their other brands, are they not
able to do so with E. They should suggest other, non-financial
factors that may be at play (competition, production capabilities,
current materials, etc.).
Candidate should question if these cost savings are achievable or if
we should divest the brand

232
Case #22: Brand Builders Inc. (6/6)
Risks
Recommendation
Interviewer should accept the skepticism and play it up, then ask Client should invest in brand E because it is a large revenue brand but the
candidate for recommendation to client. only brand in the portfolio that is not profitable
We can save $6M and achieve 20% profitability by benchmarking our
costs as a percentage of revenue to our other successful brands
Risks:
What happens if it costs more to invest than we save (the $6M
per year)
What if we are focusing on growing a business that is just
destined to be unprofitable due to some other factor
(competition squeezing prices for example)
Opportunity cost of investing in something unprofitable versus
growing already successful, high margin brands

Next Steps

We do not know if profitability is achievable without considering other

factors (market, competition, manufacturing capabilities) and would like
to investigate those further
We would need to also understand the cost of our investment to achieve
these savings and determine whether it is worth it to invest (NPV, pay-
back period, etc.).
We would also like to consider a sale of the brand and how much value
could be derived from that versus the cost of our investment

233
 Quant Level – HEAVY

Case #23: Lola Lo’s Zoo (1/ ) Case Type Industry Client Type

Investment Decision Entertainment Zoo Owner

UNDISCLOSED – Round 1 – Candidate Driven

Fit Questions Interviewer Guidance

1. Tell me about a leader or role model in your life. Why The candidate should realize that this is a net present value investment problem, meaning that
do you admire them? What lessons have you learned Lola Lo should be willing to purchase the dinosaur at any price producing a positive net present
from them? What is a recent example of you applying value.
those lessons?
2. Tell me about a time you had to pivot your initial If the candidate asks about Lola Lo’s objectives, respond, “Lola Lo is primary interested in
approach. How did you go about it? whether the investment would pay for itself, but is also thinking more broadly about other
benefits”.

Fit Evaluation If the candidate asks about timeframe, respond, “If Lola Lo decides to move forward, the zoo
Overall Fit Performance would like to invest and set up the exhibit as soon as possible”.
S1 O1 A1 R1
2 2 2 2

Case Prompt Case Development

Our client, Lola Lo, owns and runs a zoo in a major metropolitan area within the United States. There has been a 1. Framework
recent discovery of a dinosaur on a small island in the South Pacific. This is the only dinosaur in the world. Lola Lo 2. Discussion/Q&A
would like to investigate if purchasing the dinosaur is a good project.
3. Net Present Value analysis
Specifically, please help our client with the following questions: 4. Investment decision
1. How would you determine if purchasing the dinosaur is a good project? 5. Final recommendation
2. If it is, how would you determine the purchase price for the dinosaur?
Case Evaluation
Structure and Framework

Analytical and Problem Solving Ability

Communication and Positive Attitude

Synthesis and Recommendation

234
Case #23: Lola Lo’s Zoo (2/ )
Framework Interviewer Guidance
Working hypothesis: Lola Lo should purchase the dinosaur at a price that is Did the candidate state a hypothesis?
less than the overall investment breakeven point. The candidate should express the core idea that they would like to test
Will the dinosaur investment be at least breakeven? through their analysis. They should clearly demonstrate how the
Revenues questions they’re asking are directed at answering the specific question
Ticket sales of whether Lola Lo should purchase the dinosaur.
Food, hotel accommodations It’s less important for the hypothesis to be backed up with evidence,
since it’s so early in the case though strong candidates will draw on
Movie & entertainment licensing
their own knowledge and intuitions to develop preliminary insights
Merchandise
about the potential for this new exhibit at the zoo).
Research
Costs Is breakeven the primary consideration? Are external factors considered?
Purchase of dinosaur Breakeven is the deciding factor for Lola Lo. It’s OK for candidates to
Construction of exhibit area discuss other considerations, but their primary focus should be on
Staff to serve the dinosaur whether the investment would at least break even.
Food & merchandise sales
Is the framework case-specific?
Operations
Excellent frameworks will explore specific aspects of the zoo and new
exhibit, rather than just generic ideas about investment.
Will it be feasible to transport and show the dinosaur in the zoo?
For example, how do you determine the revenue from tickets? Are you
Risks proposing a separate ticket? If so, then you can count those revenues.
Disease or death; cloning or discovery of additional dinosaurs If you are proposing the same ticket for the zoo and dinosaur exhibit,
Safety & legal considerations then not all the revenues from tickets will count. Only the revenues
Transportation and Display from the tickets in excess of original ticket sells will count.
Movement of dinosaur from South Pacific
Sustaining a healthy dinosaur in a captive environment
Meeting zoo visitors’ preferences to view the dinosaur

235
Case #23: Lola Lo’s Zoo (3/ )
Case Development Interviewer Guidance
Facts about the Dinosaur and Zoo The candidate should drive the case forward. Provide the candidate with the
The dinosaur is the size of an elephant. information below when it is requested. Push the candidate to think about
The dinosaur can easily be transported from the South Pacific to the specific ways to estimate revenue, costs, and profits for the dinosaur within
United States. the zoo. Don’t simply disclose information if asked open-ended questions
The dinosaur cannot reproduce. about expected revenue, costs, or profits. If a candidate is unable to identify
The dinosaur is not violent, but cannot interact with non-trained an item after brainstorming, you can provide it so that the candidate’s math is
individuals. complete.
The zoo has enough land to house the dinosaur and construct an exhibit
area without reconfiguring the existing park. Revenues (annual)
Tickets: $2,000,000
Age and Lifespan of the Dinosaur Hotels Accommodations: $1,000,000
While the actual numbers are not that important, the candidate needs to Movie & Entertainment Licensing: $500,000
realize that this is a net present value problem and the project lasts as long as Food in the Park: $500,000
the dinosaur is alive. It is important to determine the age and lifespan of the Merchandise: $250,000
dinosaur. Research: $250,000

Before disclosing the following information, the candidate should suggest Fixed Costs (one-time)
ways of determining both the age and the lifespan of the dinosaur. Dinosaur: Unknown (This should be solved.)
Exhibit Area and Housing Area: $15,000,000
Some suggestions could be consulting a dinosaur expert, DNA testing, fossil
testing, comparisons to living animals, examining growth rate/metabolism, Variable Costs (annual)
etc. Staff to Serve the Dinosaur: $1,000,000
Food & Merchandise Sales: $250,000
Provide candidate with the following once they come up with age and lifespan Operations: $250,000
suggestions:
Current Age: 21 years
Expected Lifespan of Dinosaur: 50 years

236
Case #23: Lola Lo’s Zoo (4/ )
Calculations Calculations (Continued)
Operating Profit
Based on the information provided, we can calculate the annual operating
cash flows for the next 29 years as follows:

Annual Revenue
$2M (tickets) + $1M (hotel) + $0.5M (movie) + $0.5M (park food) + $0.25M
(merchandise) + $0.25M (research) = $4.5 M

Annual Costs
$1M (staff) + $0.25M (food &merchandise) + $0.25M (operations) = $1.5 M

Annual Profit
Annual Operating Profit = $4.5 M $1.5M = $3M

Discount Rate
Besides knowing the expected lifespan of the dinosaur and all the revenues
and costs, the candidate needs to ask about the discount rate.
Discount rate = 10%

NPV
Now with all the information, the candidate can determine the highest
amount that the client should pay for the dinosaur.
Assume revenues and costs are static over time to simplify the equation.
To solve for maximum cost of dinosaur, assume the breakeven NPV = 0 .

237
Case #23: Lola Lo’s Zoo ( / )
Brainstorm: Exhibit Design Interviewer Guidance
After concluding the breakeven analysis, ask the candidate, “If you were asked Throughout the case, the candidate should relate their insights back to the
to design the exhibit area for the dinosaur, what are the major things that you central hypothesis being tested.
would consider?” The candidate should also realize that the dinosaur will not live forever;
therefore, the revenue stream will disappear when the dinosaur dies.
Safety of viewers: nets, cages, alert systems Strong candidates will make case-specific observations (relevant to this
Dinosaur well-being: feeding, grooming, health monitoring particular investment consideration of a dinosaur within Lola Lo’s Zoo ,
Size of the exhibit area: balance between sufficient space for the dinosaur rather than using generic ideas about investments.
to roam and sufficient proximity for spectators to see
Spectator experience and viewing efficiency
How to route traffic around the exhibit area
Moving walkway: prevents traffic from building up and controls the
cycle time that spectators spend in the exhibit area
Multiple levels: more spectators can cycle through simultaneously

238
Case #23: Lola Lo’s Zoo ( / )
Risks
Recommendation
Lola Lo should purchase the dinosaur and pay no more than $13.125M The dinosaur could die of diseases in North America
The investment calculations show a positive net present value for a No zoo in the world has ever cared for a dinosaur before; this creates a
purchase price equal to or less than $13.125M host of unknowns in the exhibit area that could drive up costs
The zoo should expect $3M total annual profit from the dinosaur The dinosaur may come into contact with non-trained individuals more
exhibit for the next 29 years frequently (e.g. spectators) than a normal animal, raising liability risk
The dinosaur’s exhibit can be designed to maximize efficiency and
spectator safety

Next Steps

Engage scientific experts for advice in caring for the livelihood of the
dinosaur
Evaluate dinosaur exhibit designs and associated costs by comparing
options to those for similarly-sized animals at other zoos
Conduct design review of the proposed exhibit to ensure safety; evaluate
insurance options

239
 Quant Level – LIGHT

Case #24: Lost Patent (1/4) Case Type Industry Client Type

Pharmaceutical / Drug
Revenue
A.T. KEARNEY – Round 2 – Interviewer Led Healthcare Company

Fit Questions Interviewer Guidance

1. Tell me about a time where you had to make a decision This case tests the candidate's business acumen as they should understand why cost savings are
based on incomplete information. How did you do it? not likely and focus on revenues instead. This case is also very open-ended and not focused on
2. How do you see yourself becoming involved in the quantitative problem-solving; it would likely be paired with a heavy quant case.
culture / various initiatives of this Firm?

Fit Evaluation
Overall Fit Performance
S1 O1 A1 R1
2 2 2 2

Case Prompt Case Development

Your team has been working with a major drug company on their future strategy. Their patent on a blockbuster drug, 1. Framework
Zewal, will run out in less than a year. It currently generates half of their revenues, while 10 other drugs generate the
other half of revenues. Their next blockbuster drug is still more than 5 years away from being ready and mergers are 2. Brainstorming
not possible. How can we help the company? 3. Discussion/Q&A
4. Final recommendation
Additional information (to provide in discussion with candidate):
The company is efficient and well-run. In fact, they have been cutting costs for the last few years and they are
Case Evaluation
competitive with industry standards.
Structure and Framework

Analytical and Problem Solving Ability

Communication and Positive Attitude

Synthesis and Recommendation

240
Case #24: Lost Patent (2/4)
Framework Interviewer Guidance
Drug Market The prompt is intentionally vague. The candidate should seek
End user: our drug effectiveness, rate of disease it treats to clarify what is meant by “help the company . The candidate
Competitors
should also recognize this is not a cost-cutting case. If they
Strategic position in the market
Salesforce positioning push on this subject, let them know this is a well-established
Their drug effectiveness firm that has been cutting costs for several years.
Substitutes (generics)
Profit Maximization The candidate should seek additional information on each of
Revenues these sections in their framework to drive towards a
Increase sales volumes for drug before and after patent expires recommendation. Ask questions to probe for more information
Identify potential new customers (doctors, hospitals, etc.) and logic (see next page for questions).
Identify potential new channels for POS (drug stores /
pharmacies) Customer
Create own generic knock-off (cannibalize self) Competition
Increase sales volumes for other 10 drugs Company
Costs
Industry standards and relative positioning
The structure for this case is very open-ended. A good
Drug Company
Evaluate salesforce effectiveness candidate will have developed a structure which includes each
# of employees relative to industry of the areas above and more.
Compensation structure & company policies for Zewal sales
Re-incentivize to sell other company drugs as Zewal patent The candidate should recognize that acquisitions are not
expiration nears possible (given in the prompt), so the interviewer should
Advertising growth redirect them if they attempt to pursue this option.
Targeted marketing programs
Working hypothesis: Since costs are not an issue, I would like to focus first
on ways to maximize revenue from Zewal before its patent expires. Then, I
would like to consider any marketing and salesforce changes necessary to
support sales increases. Therefore, it would be nice if we had information
on how we currently sell Zewal.

241
Case #24: Lost Patent (3/4)
Analysis: Questions 1 & 2 Analysis: Questions 3 & 4
Analysis 3: How would changes in the compensation structure affect sales?
Analysis 1 - Sales Revenue: Ask the candidate to identify ways to increase sales of
their drugs. Provide to the candidate if asked:
The sales person’s compensation structure is dependent on the
Customer demographics are as follows (provide to the candidate if asked): contribution margin of the drugs they sell. Each sales person has a
Salesforce mainly sells to doctors. portfolio of drugs with varying margins.
20% of all doctors make up 80% of prescriptions. The contribution margin for Zewal is the lowest. So far this strategy has
They consistently keep in touch with major HMOs. worked as there is more pull for the drug than push required from the
sales people.
Potential answers include the following:
Potential answers include the following:
Increased samples to doctors.
The candidate should walk through the potential benefits from
Expansion of coverage networks.
increased sales with the risk of increased costs.

Analysis 4: What are some potential ways to improve advertising given

Analysis 2 - Sales & Marketing Efforts: How many sales personnel should be added? competitor’s positions?

Salesforce demographics are as follows (provide to the candidate if asked): Competition is as follows (provide to the candidate if asked):
Dedicated salesforce of 150 people. On average a sales person is responsible There is presently no single drug that has a similar chemical composition
for 100 doctors. as Zewal, but doctors have been trying out a combination of drug
The industry standard is one per 50 doctors. regimen from a rival company.
The rival company has the advantage of a bigger salesforce which can reach When the patent expires, our client will get about 6 months before
out to 35% of all doctors in the U.S. generic drug companies come up in the market.
Our client’s reach is about .

Potential answers include the following:

The candidate should consider the cost of hiring versus the benefit; they
should stop adding when the marginal cost > marginal revenue.
Optional: ask the candidate to sketch this graphically with basic (no numbers)
marginal revenue and marginal cost curves

242
Case #24: Lost Patent (4/4)
Recommendation Evaluation
The drug company should: There is no “right or “wrong answer. Candidate should show business
judgment when evaluating revenue vs. cost strategies.
In the current year before the drug expires our client should seek to
maximize potential revenue by: Excellent candidates will:
Expanding their sales & marketing department (MR> MC) Quickly recognize that this is a not cost-reduction case, as they are a well-
Improving advertising to bolster sales to doctors established company that has been cutting costs for years.
Identify multiple possibilities to increase revenues both before the patent
expires and after.
Our client should also seek to improve their position after the patent
expires by:
Attempting to patent a specific dosage size
Maximizing sales effort through direct-to-customer marketing
Consider revising the salesforce compensation structure for the drug

Risks and Next Steps

Risks
Competitors could develop a generic drug faster than expected, reducing
potential revenues
Increasing the salesforce and changing the compensation structure could
generate more costs than expected, thus reducing profitability

Next Steps
Analyze capabilities of competitors and determine if we can create
contracts with high-potential doctors and hospitals to be their only supplier
of Zewal
Carefully monitor costs of new sales and marketing programs and
incentives structure

243
 Quant Level – HEAVY

Case #25: Midwest Machinery Co. (1/6) Case Type Industry Client Type

Sourcing /
Industrial Goods Manufacturing
BAIN & COMPANY – Round 1 – Candidate Led Outsourcing

Fit Questions Interviewer Guidance

1. Tell me about a time you had to develop a creative This case involves some brainstorming and a lot of quantitative analysis. It is a good exercise for
solution to solve a problem. those who wish to practice ‘case math,’ particularly when working through the optional
2. Think about a ‘good team’ that you’ve been a part of questions.
what made it a good team and how did you contribute
to it? Excellent candidates will distinguish themselves through their ability to synthesize the
quantitative and qualitative aspects, particularly by factoring key details from the Q&A /
discussion into the mathematical calculations and by demonstrating an understanding of both
components when providing their final recommendation.
Fit Evaluation
Overall Fit Performance
S1 O1 A1 R1
2 2 2 2

Case Prompt Case Development

Situation 1. Q&A/ Discussion
Midwest Machinery makes a variety of machines designed for the medium to heavy industrial sector that are used in
factories, farms, and industrial buildings. Revenues are $3B and net profit margins are 12%. 2. Framework
The CEO wants to find cheaper ways to produce machines, and has pushed management to search for alternate suppliers in 3. Quantitative analysis
faraway places such as Colombia, Shanghai and India.
4. Optional questions
The CEO also wants to increase efficiency in processes that support operations. In particular, they want to ensure that basic
activities that do not involve intellectual capital are performed at the lowest cost possible. The CEO respects the company’s 5. Recommendation
traditions and strong sense of community with the town, but knows that profitability must come first for them and their
shareholders. Case Evaluation
Structure and Framework
Issue and Question
The MM team has proposed moving the manufacturing process for the XL292 machine, a critical machine for many of their
Analytical and Problem Solving Ability
end products, to India. These results may affect the CEO’s decision on whether to outsource other processes, as there is a
total of $300M in costs with outsourcing potential. Before the CEO looks at the financial data, they want to have a clear
understanding of the pros and cons of outsourcing. Communication and Positive Attitude
Develop a structure for thinking through the pros and cons of outsourcing this process to India. Explain the model and what
you would advise the CEO to consider as they review the data.
Synthesis and Recommendation

244
Case #25: Midwest Machinery Co. (2/6)
Framework: India Framework: U.S.
Pros Pros
Financial: People:
Cheaper labor, facilities, etc. abroad Loyalty, best people stay, morale will be up
Plant operations: Plant operations:
Capacity will remain steady
Unnecessary production may be streamlined resulting in more savings long Community Relations:
term, opportunity to build in higher capacity in new plant (if needed)
Unions and community leaders will continue to support Midwest
management
Cons Technology:
Financial: By producing locally, Midwest can quickly keep up with technological changes
Potential hidden costs with respect to handling products, quality control,
currency exchange rates, and doing business in a foreign country Cons
People: Financial:
Fearing for their jobs, good people may leave MM will continue to waste profits due to high costs
Plant operations: People:
Good employees may still leave as personal opportunities diminish
Idle capacity may cause further expense in local plants
Community relations:
Working hypothesis: Midwest should outsource production to increase profits
Backlash from community may hurt company brand/reputation and to remain competitive in the market. I would like to begin by exploring the
Funding: economics of such a decision, and then consider the impact of outsourcing on the
Upfront CAPEX investment will be required to move production; could be people and community.
difficult to obtain funding from bankS

Interviewer Guidance
Additional information to be provided (only if asked):
Community The company is located in a small town in the U.S. and has been the largest employer there for over 30 years.
Unions Midwest is unionized but the union and management have typically been on friendly terms.
CEO Personal Incentive If they save the company over $50M this year, they will receive a $1M bonus.
Competitors – They have been benefiting from lower costs associated with outsourcing for years.

Question 1:
Once the candidate has discussed their framework, they should drive toward next steps and a data request. If not, guide the candidate to an economic analysis of the decision
(show Exhibit 1). If the candidate does not automatically begin, ask them to calculate the profitability of staying local vs. going abroad to India.

245
Case #25: Midwest Machinery Co. (3/6)
Exhibit 1

Economics of Staying Local or Outsourcing

Stay Local India

Total Units 10,000 10,000

Labor and benefits per hour $30 $7
Hours to produce a unit 6 8
Material Cost per unit $400 $250
Holding cost per unit $30 $20
Shipping cost per unit $15 $44
Import Duty $0 $90
Made in USA credit per unit $85 $0

246
Case #25: Midwest Machinery Co. (4/6)
Economics: U.S. Economics: India
Sample response: Sample response:

= (Labor * Hours) (30*6 = $180) = (Labor * Hours) (7*8 = $56)

+ Materials ($400) + Materials ($250)
+ Holding cost ($30) + Holding cost ($20)
+ Shipping ($15) + Shipping ($44)
+ Import duty ($0) + Import duty ($90)
- USA credit ($85) - USA credit ($0)
----------------------------- -----------------------------
$540/unit $460/unit

$540/unit * 10K units $460 * 10K units

= $5.4M total cost = $4.6M total cost

Interviewer Guidance
Cost savings = $0.8M ($5.4M - $4.6M) or 14.8% (~15%, $0.8M/$5.4M)
Extrapolating to other processes of $300M of costs with outsourcing potential it can save up to ~45M ($300M * ~15%)
M is of Midwest’s bottom line B M of profit, M M .

Ask the candidate:

Returning to your model, how has the outcome of your calculations affected your thinking about this problem, if at all?

Candidate should return to their framework and initial hypothesis and use the data to either confirm or to shift their hypothesis. The candidate should
consider risks and next steps based off of this data and their conclusions. This response is an opportunity to demonstrate structured thinking (in written
form) before moving on to questions 2 and 3.

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Case #25: Midwest Machinery Co. (5/6)
Question 2 Question 3
What would happen if labor costs in India doubled? At an investment of $2.5M, how many units would Midwest Machinery Co.
need to break even? (Use original labor costs.)
Sample response:
Sample response:
= (Labor * Hours) (7*8*2 = $112)
+ Materials ($250) Breakeven when investment = Total cost saved
+ Holding cost ($20) Cost savings = $80/unit
+ Shipping ($44) Investment = $2.5M
+ Import duty ($90) Breakeven:
- USA credit ($0) Investment = Cost savings * Units
----------------------------- $2.5M = $80 * units
$516/unit
$2.5M/$80 = 31,250 units to breakeven on investment
$516 * 10K units
= $5.16M total cost

Save ~4% as compared with staying local (($5.4M - $5.16M)/$5.4M)

If outsource all $300M in costs = ~$12M savings ($300M * ~4%)
Total savings represent ~3% of current profit margin ($12M/$360M)

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Case #25: Midwest Machinery Co. (6/6)
Recommendation Evaluation

Midwest should outsource production of the XL282 machine: The candidate should develop an opinion regarding whether the overseas
Midwest can expect to save about $0.8M when going abroad with the investment is worthwhile. The recommendation itself is less important
than the consideration of both qualitative and quantitative factors.
XL282 machine, with a total expected outsourcing potential of around
$45M. Although the savings for this individual machine do not seem The candidate should weigh the impact of the additional $300M in
high enough to merit overseas investment, the aggregate overseas outsourcing costs (i.e. their final recommendation should not solely be
potential is large enough to justify the risk. based on the expected results from the XL282 machine).
Based on the ‘pros and cons’ discussion, it may be a good idea to
When candidate is weighing the importance of different factors, they
perform a pilot using the XL282 machine, making sure this part is
should demonstrate awareness of background information provided (e.g.
successful before moving the additional processes totaling $300M of CEO is more concerned about profits than community ties).
costs to India.

Risks and Next Steps

Risks
Unpredictable changes in a foreign country:
Supplier change large savings may disappear
Government changes taxes and credits may shift
Hourly rate less predictable rates and productivity in India
Weather- potential supply disruption due to weather conditions
Quality of product
Employees’ job concerns over outsourcing, union and community backlash

Next Steps
Perform a more detailed analysis of variable risk factors to quantify likelihood of
potential disruptions
Craft a proposal for the XL292 machine pilot that includes a more detailed cost
forecast and that maintains product quality standards
Invest time in frequent and open communication with employees to be
transparent about company shifts and any effects these shifts would have on
employees’ jobs

249
 Quant Level – MEDIUM

Case #26: New Vaccine (1/6) Case Type Industry Client Type

Pharmaceutical /
Market Entry Pharmaceutical
L.E.K. – Round 1 – Candidate Led Healthcare

Fit Questions Interviewer Guidance

1. Tell me about a time you received feedback that you This is a quantitative case that requires the candidate to synthesize facts presented in the
did not agree with. How did you respond? discussion component with the data provided directly to them through the exhibit. Excellent
2. Tell me about a time you needed to establish credibility candidates will be comfortable going beyond the calculations directly asked of them to generate
with a team / manager. How did you accomplish this? more meaningful comparisons between different aspects of the data.

Fit Evaluation
Overall Fit Performance
S1 O1 A1 R1
2 2 2 2

Case Prompt Case Development

Our client is a large pharmaceutical corporation, and they have developed a new vaccine that prevents low birth 1. Framework
weight infants from contracting staph infections. They have approached us to determine the potential for this vaccine.
2. Q&A/ Discussion
3. Quantitative Analysis
Additional detail that can be provided in response to candidate follow-up questions: 4. Recommendation
When the candidate asks what is meant by the ‘potential for this vaccine,’ explain that our client is looking for
clarity around revenue potential and a cost-benefit analysis of administering the vaccine.
Case Evaluation
Our client is looking to launch this product in the United States, and is not currently concerned about international
Structure and Framework
potential.
Analytical and Problem Solving Ability

Communication and Positive Attitude

Synthesis and Recommendation

250
Case #26: New Vaccine (2/6)
Framework Interviewer Guidance
Market Size This is the back-and-forth section after the framework is presented. Below are
Population / demand several data points the interviewer should provide out loud if asked. The
# of low birth weight infants / yr. candidate may elect to complete market sizing first and come back to
Rates of staph infections remaining questions later during the analysis.
Other vaccines (competition); substitute products (antibiotics)

Revenue Potential
Basic Population / Demand Information
Price point per dose of vaccine
Costs to administer vaccine; cost of other treatments if population is Babies born each year in 5 million
the U.S.
infected with staph (antibiotics)
Distribution channels: hospitals, clinics, drug stores / pharmacies Low birth weight babies 10% of all babies
born each year
Product mix:
Can vaccine be administered with other vaccines needed by (this segment Basic Product Information:
of) babies? Cost of Administration $1,000 per dose of vaccine
Does our client make additional vaccinations for (this segment of) babies? Dosage 6 doses (shots) needed per child
Product details: frequency of administration, efficacy, etc.
FDA Approval Product has been fully approved

Risks R&D Considerations No - not for this case

Stage of drug development: Success Rate Assume 100% for this case
Ready for market? In clinical trials? Basic Competitor Information:
FDA approval Other comparable None
Changes to target population birth weights (i.e. # of babies born with such low vaccines on market
birth weights in the U.S. may change with further advances in nutrition and Alternative products Yes if a low birth weight baby contracts staph,
healthcare) the infection can be treated with antibiotics
(assume these are always successful). Note:
Transition statement: To determine revenue potential, I would like to analyze the more detail in Exhibit 1.
market demand by looking at the % of new births that will be targeted by this
vaccine. Then, I would like to look at the cost of administering each vaccination to
determine pricing potential. Do we have any such data?

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Case #26: New Vaccine (3/6)
Interviewer Guidance Interviewer Guidance
Show candidate Exhibit 1. Ask: The candidate should be able to fill out the below table based on the
1). What do you think you should price the vaccine at? information provided in Exhibit 1 (next page)
A: At or above the cost of administration or >= to $1000 / dose ($6K total).

2). What is the potential revenue for the client at this price point?
A: At this point, the interviewee should be able to calculate the revenue
potential of this vaccine given the current size of the target population: Segment of low <1,000 1,000- 1,500-
birth weight grams 1,500 2,500
(5M * 10% low birth weight babies) * (6 * $1,000/dose of vaccine) babies grams grams
= (500K low birth weight babies) * ($6,000/full vaccine
% of low birth 10% 10% 80%
administration) weight babies by
= $3B in revenue potential segment
Frequency of staph 40% 10% 2%
. If the candidate tries to end the case here, push them by saying, “wow, by segment
that’s a huge number, can we go tell our client they will get $ B per year in
Cost per child for $35K/child $25K/child $10K/child
revenue for this vaccine? Do you think that’s realistic?” antibiotics
A strong candidate would take this into consideration automatically.
Size of segment 50K babies 50K babies 400K
(500K * (500K * babies
4). Encourage the candidate to consider alternative treatments / substitutes 10%) 10%) (500K *
(competitor information on prev. page). 80%)
After discussing that the antibiotics are a substitute product, the candidate
Cost to vaccinate $300M $300M (50K $2.4B
should inquire if there is any additional information available regarding this entire segment (50K * $6K) * $6K) (400K *
type of treatment. $6K)

At this point the interviewer may state and ask the following:
The frequency of staph infections and the cost to treat them with
antibiotics vary depending on the size of the baby. The client is
interested in understanding the cost to vaccinate the total population of
babies as compared to the cost to treat the population of low birth
weight babies with antibiotics.
First what is the cost to vaccinate the population of low birth weight
babies by segment?

252
Case #26: New Vaccine (4/6)
Exhibit 1

Staph Infection Treatment by Baby Size

Segment of low birth <1,000 grams 1,000- 1,500 grams 1,500- 2,500 grams
weight babies

% of low birth weight 10% 10% 80%

babies by segment

Frequency of staph by 40% 10% 2%

segment

Cost per child for $35K/child $25K/child $10K/child

antibiotics

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Case #26: New Vaccine (5/6)
Case Development
At this point the case should turn into a cost / benefit analysis. The person doing the case may ask a lot of questions about who’s paying, etc. For this case, that
is not important. Just inform the candidate that whichever treatment is the most cost effective will be the treatment most likely administered for each
segment of the low birth weight baby population.

The candidate should come up with the following comparison that they can use in their final recommendation.

Segment Cost to vaccinate Cost to treat with antibiotics Conclusion

<1,000 grams $300M $700M (0.4*50K*35K) It is reasonable to expect that our client will attain $300M in
revenue to cover the costs from vaccinating this segment, so
vaccination would be the preferred treatment method for
this segment of low birth weight babies.
1,000 - 1,500 grams $300M $125M (0.1*50K*25K) Our client could potentially capture $300M in revenue to
cover the costs associated with treating this population
segment with the vaccine. However, it is not guaranteed and
the antibiotic treatment may be the best treatment method
for this segment of low birth weight babies.
1,500 - 2,500 grams $2.4B $80M (0.02*400K*10K) It is unlikely that our client will attain $2.4B in revenue to
cover the costs associated with treating this segment of low
birth weight babies with the vaccine. Unless there is some
sort of government mandate that vaccine be given to all low
birth weight babies, it is best to treat this segment of the
population with antibiotics.

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Case #26: New Vaccine (6/6)
Recommendation Evaluation
The company should consider a potential revenue range of $300M - $600M Someone who “cracks the case will instinctively realize that it’s cheaper to
This depends on their ability to successfully capture the 1,000 - 1,500 vaccinate the smallest group, and that it may be more cost effective to
grams segment for which the vaccine is not quite as cost effective treat the other groups with antibiotics.

The interviewee should present / discuss the risks associated with

capturing the market for each segment of low birth weight babies. But, for
the final recommendation, the candidate should synthesize their thoughts
into one final analysis on the revenue potential of the vaccine for the
client.

Risks and Next Steps

Risks
Inability to capture segments for which the vaccine is less cost effective
Risk of more harm to babies if they are allowed to contract staph first and
are treated with antibiotics vs. vaccination
Public opinion against vaccinations

Next Steps
Develop a product marketing strategy based on different levels of revenue
potential explaining the benefits of preventing staph infections for low
birth weight babies by vaccination
Analyze potential short-term and long-term health effects of a staph
infection on low birth weight babies to share with doctors / parents about
why vaccination has a potentially higher overall benefit vs. antibiotics

255
 Quant Level – MEDIUM

Case #27: Payments Company (1/6) Case Type Industry Client Type

Payments (Credit
Profitability Financial Services
DELOITTE – Round 1 – Interviewer Driven Cards)

Fit Questions Interviewer Guidance

1. Are you applying to all consulting firms? Why / why Read the following statement out loud to the candidate before you read the case prompt:
not? Our client, PayCo, is a global credit card company, with revenues over $5B in 2010. A recent trend in the credit
2. Why should I hire you over your peers? card industry is the use of contactless (tap and go) payments technology to make small everyday purchases at
places like fast food restaurants and convenience stores.

PayCo is looking to leverage contactless payments to drive top-line growth and has identified the transit vertical
(i.e. subways, trains, buses, taxis) as an opportunity for growth since this is generally a cash dominated vertical. In
support of this strategy, PayCo has developed proprietary technology called “TAP to process contactless
transactions specifically for transit applications, and is looking to commercialize this technology. A key challenge is
Fit Evaluation whether transit authorities will implement this new technology or stay with current systems for fare collection.
Overall Fit Performance
S1 O1 A1 R1 Deloitte Consulting has been engaged to size the overall transit market globally, prioritize potential opportunities,
2 2 2 2
develop a financial business case, and develop a go-to-market strategy.
Case Prompt Case Development
Your role on the PayCo engagement is to develop the business case for commercializing PayCo’s contactless
1. Framework
technology.
2. Questions and Financial Analysis
1) Which market and transit vertical should PayCo target as a first priority?
) What is the profitability of the “TAP” technology? Specifically, will PayCo breakeven on commercializing “TAP” in less 3. Recommendation
than 5 years?
3) Would you recommend that the client pursue the commercialization of this technology?
Case Evaluation
Structure and Framework
Case Questions:
This case is driven by the above series of questions to be asked of the candidate. Do not pursue all questions with the
Analytical and Problem Solving Ability
candidate up front, as each question is meant to be a mini-case. Rather, these questions are provided on subsequent
pages in the order that they should be asked of the candidate. A traditional framework will not be needed for this
Communication and Positive Attitude
case, but the candidate should remain structured in their thinking and in their responses throughout the case.

Synthesis and Recommendation

256
Case #27: Payments Company (2/6)
Exhibit 1

Country Data1

US England Japan

Population (MM) 313 63 126

Population Growth (%) 0.96% 0.56% -0.28%
GDP ($Tr) $14.7 $2.2 $4.3
GDP Growth (%) 2.7% 1.6% 3.0%
GDP per Capita (USD) $47,400 $35,100 $34,200

Subway System Data Buses Data

NYC London Tokyo NYC London Tokyo

Daily Passengers (MM) 11.5 8.5 14.3 Daily Passengers (MM) 3.0 4.5 5.8
Annual Fare Collection ($B) $12 $13 $45 Annual Fare Collection ($B) $2.8 $5.5 $4.4
Timing for new system 2012 2012 2015 Timing for new system 2013 2013 2015
Probability of winning Probability of winning
contract 2
90% 70% 20% contract 2
90% 70% 20%

Notes:
1 Data from CIA World Factbook, extracted April 2011. GDP figures at purchasing power parity
2 Probability of winning contract is based on estimates from the PayCo Business Development team, and can be used to determine the potential revenue
opportunity for PayCo

257
Case #27: Payments Company (3/6)
Question 1
1. Which market and transit vertical should PayCo target as a first priority?

Note to interviewer: Provide Exhibit 1 to the candidate. If the candidate only provides a quantitative answer, prompt them for additional qualitative
considerations.

A good answer will draw the following conclusions from the data provided:

The answer we’re looking for is New York Subways.

Given the subway and bus detail, the candidate should quickly recognize that the country data is too high-level.
A quick comparison of subways and buses should rule out buses without any calculations.
Even though Tokyo subways is the largest market, it actually has the smallest potential due to a low probability of winning a contract.
New York has the highest potential revenue opportunity for PayCo based on the calculation below:

City (Fare Collection) * (Prob of winning contract) = PayCo Market Opportunity

New York: $12MM * 90% = $10.8MM
London: $13MM * 70% = $ 9.1MM
Tokyo: $45MM * 20% = $ 9.0MM

A better answer will include the items above and address additional elements around the data. Some findings include:

Although Tokyo looks like a huge opportunity initially, they are not looking for a new system until 2015, while NYC and London are ready earlier (2012).
The candidate may also raise the sensitivity of this assessment on the sales probability data point and point out how even a 5% increase for Tokyo would
give it the highest value.

A great answer will include the items above and also raise additional considerations beyond the data, including:

How strong is PayCo’s brand in each city?

Is one city more strategically important to PayCo?
Are there differences in cost or difficulty in going after these markets?
Do PayCo’s capabilities make one option more likely to succeed than another?

258
Case #27: Payments Company (4/6)
Exhibit 2

NYC Subway Forecast Data

2011 2012 2013 2014 2015

"TAP" Transactions (MM) 1,500 2,000 2,500 3,000 3,000

"TAP" Fare Collection ($MM) $3,750 $5,000 $6,250 $7,500 $7,500

PayCo “TAP” Assumptions

Revenue Assumptions Cost Assumptions

Annual License Fee ($000s) $250 Past Investment in "TAP" Development

($000s)
$1,000
"TAP" Processing Fee * 0.20%
Cost per transaction $0.005
* Processing Fee applies to dollar value of Fare Collections

Cost Projections (in $000s) 2011 2012 2013 2014 2015

Advertising and Promotion $500 $250 $0 $0 $0

SG&A $50 $50 $50 $50 $50

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Case #27: Payments Company (5/6)
Question 2
. What is the profitability of the “TAP” technology [for NYC]? Specifically, will PayCo break even on commercializing “TAP” in less than 5 years?

Note to interviewer: Provide Exhibit 2 to the candidate.

A good answer would be:

Yes, PayCo will break even in 4 years and will achieve a total profit (excluding time value of money) of $250,000 in 5 years.
A key insight is that the past investment in developing the “TAP technology is a sunk cost in making the decision on commercializing the technology
and should not be incorporated into the analysis.
Here is a summary of revenues and costs calculations as a guide for the interviewer:
Revenue = (TAP Fare Collection * TAP Processing Fee) + Annual License Fee
Costs = (# of transactions * cost per transaction) + Advertising and Promotion + SG&A

A great answer would:

Be very well structured with clear calculations laid out in a grid (like a spreadsheet or income statement / P & L statement).
Realize the revenue and the cost for each year are the same after the initial calculation (see below).
Comfortably handle the variety of units (revenues in $MMs, costs in $000s, percentages).
Acknowledge time value of money and suggest calculating an NPV to evaluate the investment.

260
Case #27: Payments Company (6/6)
Recommendation
Evaluation
3. Would you recommend that the client pursue the commercialization of this A good answer will include:
technology? Based on the cost benefit analysis, commercializing “TAP is estimated to generate
PayCo should pursue the commercialization of this technology , in profit over years and meets the client’s criteria for breakeven.
Based on the cost benefit analysis, commercializing “TAP is A great answer would recognize the above, but also include:
estimated to generate $250,000 in profit over five years and meets Identification of risks in the assumptions, such as:
the criteria for breakeven The 90% sales probability assumption for NYC.
Revenue or cost drivers.
Identification of sensitivity in calculations, such as:
Forecasted transactions and fare revenue.
Cost forecasts, particularly advertising and promotion.
Qualitative benefits of pursuing commercialization:
Positive impact on brand and market share.
Becoming market leader and growing to other cities.
Competitive Response:
How might PayCo’s competitors respond to its launch of this technology?
Defining next steps, such as further analysis or a high-level implementation plan.
Risks and Next Steps

Risks
90% sales probability assumption that PayCo would win the for NYC contract
Reasonableness of the revenue and cost assumptions:
Forecasts of transaction amount and fare revenue
Advertising and promotion costs

Next Steps
Analyze potential competitor response and / or bid for NYC contract
Perform further analysis on the revenue and cost assumptions / forecasts and
develop a high-level implementation plan

261
 Quant Level – MEDIUM

Case #28: Pharmaceutical Rare Disease (1/5) Case Type Industry Client Type

Pharmaceutical /
Growth strategy Pharma company
BCG – Round 1 – Candidate-led Healthcare

Fit Questions Interviewer Guidance

1. Tell me a story that explains your background, and why This case is a NPV investment evaluation go / no-go.
you're here today (why consulting, why this firm, why
location). You should read the case prompt to the candidate and show them the data sheet on the next
2. What is your proudest accomplishment (not necessarily page as they request each piece of information.
a professional achievement)?

Fit Evaluation
Overall Fit Performance
S1 O1 A1 R1
2 2 2 2

Case Prompt Case Development

Our client is a large pharmaceutical company with a strong business in "Rare Disease" (RD). Rare diseases are 1. Framework
conditions that affect fewer than 200,000 people in the US. Historically, pharmaceutical companies have not invested
significantly in Rare Disease , because it has not been cost effective to conduct research for such small populations. 2. Revenue Analysis

3. Cost analysis
Due to the fall off in the number of pharmaceutical blockbusters and improved regulation to make R&D cheaper for
4. NPV calculation and recommendation
Rare Disease, pharmaceutical companies have begun to invest more in Rare Disease R&D over the last few years.
Our client has hired BCG because it would like to grow its Rare Disease business.
Case Evaluation
Structure and Framework
How can the client double its Rare Disease business in 5 years?
Analytical and Problem Solving Ability

Communication and Positive Attitude

Synthesis and Recommendation

262
Case #28: Pharmaceutical Rare Disease (2/5)
Framework Interviewer Guidance
Candidate should ask what growth means: revenues, profits, volume,
market share, customer base, etc. or lay out options between those
Existing RD Drug Market New RD Drug Market alternatives. The interviewer should respond by saying that the client is
Increase Penetration New Market Entry interested in all potential options for growth.
-Frequency of usage -Can drugs be used in other
Candidate should structure the growth opportunities considering
- Increase penetration on diseases?
market -Combinations with other drugs? current assets/drugs/patents + new opportunities
Existing drugs/ - Acquisition -Expansion to other Note: The suggested framework is different from the traditional market
patents countries/regions or capturing and profitability framework as it considers all options through an
underserved region in the US? existing v. new lens and structure.
Even if the candidate comes up with a different framework, it should
consider the expansion on current drugs and the new drugs under
Product Development Diversification development for other rare diseases. If not, ask the candidate what
- Small improvements in -New pipeline of R&D when
other factors should be considered until they come to this point.
current drugs -> increase would drugs be ready to go-to-
New drugs price point? market? (respecting time-frame
of 5 years)
Candidate should also talk about cross-functional issues, like regulations or
reimbursement of these drugs by health insurers.
If necessary, after discussion of the framework, ask the candidate one of
the questions below to get them started on further exploration of the
Transition statement: I would like to first consider where the client currently stands
issue.
in the market by learning more about our client’s current R D and drugs on the
market. Do we have any similar information? How would you approach our client's question on growing its Rare
Disease business?
Where would you like to start?

The candidate should then ask for company information for analysis. Show
them Exhibit 1.

263
Case #28: Pharmaceutical Rare Disease (3/5)
Exhibit 1

264
Case #28: Pharmaceutical Rare Disease (4/5)
Interviewer Guidance Math Calculation
After showing Exhibit 1 to the candidate, ask them: based on the data, how Growth from existing assets: assumes linear growth do not ask to calculate
large will the client’s Rare Disease business be in years? compounding growth.

If necessary, ask, what is the shortfall to the client’s goal of doubling their Current baseline: $2.5B, growing at 5% for 5 years = $2.5B * 5% * 5
business? = $625M

Then ask, what does the client need to do to double the Rare Disease Growth from pipeline:
revenues in 5 years? If candidates discusses acquisitions, ask, who should Phase # of assets Attrition Peak Rev % of peak rev Total
be acquired? How many assets will we need to buy?
I 5 x 20% x $500M x 20% - 1st year = $100M
II 3 x 40% x $500M x 40% - 2nd year = $240M
Information to be provided upon request: III 1 x 60% x $500M x 60% - 3rd year = $180M

Our client is an industry leader with a track record of success. Its existing = $520M
business is $2.5B, expected to grow at 5% per year.
Rare disease market is B and is as profitable as Big Pharma“.
Note: research assets need 6 years to reach the market and will not generate
While research is relatively expensive, the government provides tax revenue in 5 years.
credits for drugs designated to treat rare diseases.
Shortfall:
Additionally, prices tend to be higher to make up for the upfront
Growth target: $2.5B - to double the business
research investment. It's also growing faster than Big Pharma.
Internal growth is $625M + $520M = $1.145M, need ~$1.4B more
There are many small bio-techs that are attractive targets and there are If each asset is $500M, then the client needs to buy 3 peak revenue assets
also other big pharmaceutical companies that have rare disease or more (if they are in R&D) to double business in 5 years.
divisions / assets. Assume each company has approximately $500M in
revenues. Portfolio in 5 years:
$5B portfolio with:
$3.1B (~60%): from current baseline
$520M (~10%): from pipeline
$1.4B (~30%): acquisitions

265
Case #28: Pharmaceutical Rare Disease (5/5)
Recommendation Interviewer Guidance
Recommendation After completing the analysis, ask the candidate to provide a
In order to double the current revenue of $2.5B, client will need to acquire ~3 recommendation on what is necessary for the company to achieve its
"peak revenue" assets to close the gap between your goal of $2.5B and the desired market growth. The main question in this case is not whether the
$1.1B their portfolio will generate organically growth is realistic or feasible, but rather, what should be done to achieve
the client’s target.
Current pipeline will provide $3.1B in revenue, assuming 5% growth In the recommendation, the candidate should focus on addressing the
New research will contribute with $520M in revenue, considering Phases I original question and on providing the results from the analysis.
to III
Acquisition of 3 players (average revenue of $500M), would compose
additional needed revenue of $1.4B

Risks
Difficulty in acquiring businesses / market value
Delays in R&D and testing phases may delay revenues from new products
Regulation

Next Steps
Perform due diligence of possible targets to evaluate best options
Define internal mechanisms to control track of product launches to
guarantee timing
Work on FDA approval and obtain patents for drugs in pipeline and on
market to guarantee projected revenues

266
 Quant Level – MEDIUM

Case #29: Project Gargoyle (1/9) Case Type Industry Client Type

Investment Decision Hair Care Products PE fund

BAIN & COMPANY – Round 1 – Candidate-led

Fit Questions Interviewer Guidance

1. What are your major strengths? This case is a investment go / no-go evaluation.
2. Tell me about a time you had to deal with a challenging You should read the case prompt to the candidate and show them the data sheet on the next
situation. page as they request each piece of information.

Information to be provided only upon request:

Gargoyle has grown quickly, especially during most recent period.
EBITDA margin declined and EBITDA $ were flat.

Fit Evaluation
Overall Fit Performance
S1 O1 A1 R1
2 2 2 2

Case Prompt Case Development

Your client, a private equity fund, is evaluating the potential acquisition of Gargoyle. Gargoyle is a premium, fashion 1. Framework
forward hair care products brand sold in the U.S. Gargoyle has grown quickly over the past 5 years and management is 2. Revenue Analysis
forecasting strong top-line growth. 3. Cost analysis
4. Break-even calculation
Your client has little experience in the industry and needs to quickly evaluate the opportunity. Your client would like to 5. Recommendation
grow cash flow (EBITDA) each year during the investment horizon with minimal capital expenditure.
Case Evaluation
How should you evaluate the opportunity? Should the fund invest in Gargoyle?
Structure and Framework

Analytical and Problem Solving Ability

Communication and Positive Attitude

Synthesis and Recommendation

267
Case #29: Project Gargoyle (2/9)
Framework Interviewer Guidance
Working hypothesis: The fund should invest in Gargoyle; but, I would like to test this Profitable growth over the investment horizon is the key factor in determining
by first looking at the financials of the opportunity and then by determining whether attractiveness of the opportunity.
the market is attractive.
A profit tree framework should be included as a key way to understand the
Hair Care Market Is the market attractive? root cause of margin decline (EBITDA decline, flat $).
Size of the market
Market is Growing / Shrinking in the US? (historical + forecasted data) The framework utilized should also assess attractiveness of market and company
Competitive landscape (market is consolidated or fragmented) as well as an assessment of company profit.
Substitutes (professional products, natural products) Candidate should understand these points first to better understand how to
Gargoyle Specifics calculate profitability of the opportunity.
% of share opportunity to capture more?
Segments targeted today opportunity to expand to other segments?
Channels used
Customer loyalty
Leadership team and cultural fit

Gargoyle Profitability
Revenue
# Products sold
Price per unit
Product mix
Cost
Variable cost cost per unit of product Determine best
Chemical products evaluation tool for
Bottles client:
Packaging NPV
Fixed costs SG&A, distribution, insurance Payback period
Investment Breakeven
Money for acquisition is available?
Payback or break-even requests?
Cost of capital discount factor
Is the best use of capital?

Client requests PE Portfolio

Does it make sense to the fund?
Synergy with other current investments?

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Case #29: Project Gargoyle (3/9)
Interviewer Guidance Interviewer Guidance (cont’d)
Exhibit 1: Historical revenues Exhibit 4: Cost to serve drugstores
After laying out the framework, the candidate should start exploring the company’s Ask the candidate, if we were to invest in the drugstore channel, what is the breakeven
financials, starting with revenues. If not, guide the candidate to that; then, show Exhibit 1 quantity for drugstores?
and ask: Candidate should ask for cost information per unit. Show Exhibit 4.
What observations can you make about Gargoyle’s growth? Candidate should then proceed with a breakeven calculation:
Candidate should highlight: $5M Fixed Cost / $0.50 margin per unit = 10M units to breakeven
Gargoyle has grown quickly, especially during the most recent period. 10M units for breakeven x $5/unit = $50M break even revenue
EBITDA has grown more than revenues through 2009, but has de-accelerated since.
Last year EBITDA margin declined and EBITDA $ were flat.

Exhibit 2: Hair product market segmentation by channel Exhibit 5: Salon interviews – Brand perception comparison
If the candidate asks for company information first, jump to Exhibit 3 and then come back to After observing that the drugstore business also doesn’t seem attractive. The candidate
Exhibit 2. Otherwise, candidate should want to understand the reasons for EBITDA decrease should be inclined to evaluate if there is still some value in the Gargoyle brand for its
and take a look at the market segmentation. If necessary, push candidate to evaluate the consumers, for example by assessing customer satisfaction. Show candidate Exhibit 5.
market by asking:
What would you expect to see in the hair product market? What growth would you expect? If the candidate goes in a different direction, lead them toward this direction by asking: what
What channels? What does the market analysis tell you? Show Exhibit 2. other factors can be valuable in the Gargoyle brand?
Candidate should make logical points about growth (e.g., growth is roughly aligned with If you need to ask this, evaluate how structured the candidate’s brainstorming is.
population growth) and think through channels.
Market growth is not attractive. Does Gargoyle play in high growth areas? From the graph analysis, candidate should highlight:
Salon/stylist as key customers/influencers, but Gargoyles product does not perform well
with stylists.
Exhibit 3: Gargoyle sales by channel Exclusive distribution is important to salons (selling to drug stores is likely to erode core
After evaluating the market, candidate should ask for Gargoyle’s revenue breakdown by customer base).
channel. Show Exhibit 3. If necessary, push candidate to find reason of EBITDA decrease in Gargoyle is underperforming relative to peers on customers’ needs.
2010, by asking them:
What drove margin decline in ‘ 0?
Candidate should highlight:
Gargoyle began distributing to drug stores in 2010.
All growth came from this segment (10M), since, as we saw in Exhibit 2, the salons
channel is not growing.

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Case #29: Project Gargoyle (4/9)
Exhibit 1

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Case #29: Project Gargoyle (5/9)
Exhibit 2

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Case #29: Project Gargoyle (6/9)
Exhibit 3

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Case #29: Project Gargoyle (7/9)
Exhibit 4

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Case #29: Project Gargoyle (8/9)
Exhibit 5

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Case #29: Project Gargoyle (9/9)
Recommendation Interviewer Guidance
Recommendation After the analysis, ask the candidate for their recommendation.
Client should NOT invest in Gargoyle The candidate should recommend that the PE fund NOT invest in
Market growth of the industry is not attractive Gargoyle.
Majority of sales are in the salon market, which is a segment that is Interviewee should identify that the client wants to ensure
not growing and in which Gargoyle has been underperforming its profitable growth over the investment horizon.
competitors Gargoyle entered lower margin drug store channel in 2010, causing
Expansion to the drug store channel is not profitable (breakeven is EBITDA margins to decline.
met); is the underlying reason EBITDA margins have deteriorated A wrap-up answer will consider detrimental impact on core customer
Customer research reveals that Gargoyle does not perform well against (salons) by selling product through alternative mass distribution channels
most important criteria (brand perception, pricing, exclusivity, etc.). Also, candidate should
consider alternative growth options, but ultimately conclude these are
risky and expensive.
Risks
Any further investment in the drug store market could harm key customer
base (salons)
We might be missing an investment opportunity in this market
For competitive reasons, it can still make sense to the fund

Next Steps
Strengthen relationship with salons to improve perception of
performance and exclusivity of Gargoyle brand
Evaluate possibility of acquisition of other competitors in this market
Close the loop with fund’s management

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 Quant Level – HEAVY

Case #30: PyeongChang Winter Olympics (1/4) Case Type Industry Client Type

Tech, Media, &

Investment Decision TV Network
McKINSEY & CO – Round 1 – Interviewer Led Telecom

Fit Questions Interviewer Guidance

1. Tell me about a time you had to deal with a conflict Drive case to revenues first and read quantitative data beforehand.
with a group or with your manager.
2. Tell me about a time you had to deal with a difficult
team member or overcome a coworker who was
blocking progress.

Fit Evaluation
Overall Fit Performance
S1 O1 A1 R1
2 2 2 2

Case Prompt Case Development

In the year 2012, we have been retained by a television network that is trying to decide how much to bid for the rights 1. Framework
to broadcast the 2018 Winter Olympic Games in PyeongChang, South Korea. 2. Revenue Analysis
3. Cost analysis
How much should they bid? 4. NPV calculation and
recommendation

Case Evaluation
Structure and Framework

Analytical and Problem Solving Ability

Communication and Positive Attitude

Synthesis and Recommendation

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Case #30: PyeongChang Winter Olympics (2/4)
Interviewer Guidance
Framework
Working Hypothesis: The bid price will be determined by the overall profitability of This is a profitability case so the framework should include internal and
broadcasting the Olympics. Therefore, I would like to first start with potential ad revenue external factors driving profitability including the following:
generated from televising this event.
Assessment of the current market and competitive landscape.
Broadcasting Market Revenues and costs: please notice that the case is focused on the
Olympics Viewers revenue side. It is fine to ask the candidate about costs as a
Size for this particular event brainstorming exercise, but make sure the candidate deep dives into
Trends on Olympic viewership (growing / shrinking / method of viewing (ex. revenues.
tablets)) Candidate should acknowledge that the amount to bid is limited by the
Population segments are viewers a compelling population for advertisers? profits that could be generated from the broadcasting.
Competition

Other networks / substitutes (e.g. streaming online)

Amount to bid determined by profitability

Revenue
Advertising
Merchandising Case Development
License non-US networks to use our feed
Cost Our client is a broadcast television network that makes money through
Fixed costs building on-site studio, paying talent, broadcast infrastructure advertising only, not subscriptions.
Variable costs hotels, insurance
Other bidding costs
Opportunity cost what else could we be showing?
Discounting cash flows will be in the future; what is client’s discount rate?

Television Network
Fit are we the right station? Are we ESPN, ABC or HGTV?
Experience past sports or Olympic broadcasting experience?

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Case #30: PyeongChang Winter Olympics (3/4)
Key Data Interviewer Guidance

Market research has shown that consumers can take no more All data and facts to be provided upon candidate’s request. Do not show
than 10 minutes of ads per hour of television; they will stop the candidate the table. Rather, expect the candidate to organize this
information appropriately as this case provides an opportunity for the
watching if ad time is higher.
candidate to practice structuring their math.
Winter Olympics Schedule
After leading the candidate to focus on ad revenue, they should calculate
Duration 16 days
total ad revenue generated from the Olympic event ($928M). Per hour
Open Ceremony First day (Friday)
revenue generated is $4M ($200k per slot x 20 slots per hour) in non-prime
Competitions Held in next 14 days time and $8M in prime time ($400k per slot x 20 slots per hour).
Closing Ceremony Last day (Saturday)
Broadcast
Opening Ceremony 8 11pm
Weekdays coverage 9am 12pm, 2 5pm, 7 11pm Category Calculation Total
(per day) Weekday (non prime) 10 days X 6 hours X $4M $240M
Weekend coverage 11am 9pm (per day) Weekday (Prime) 10 days X 4 hours X $8M $320M
Closing Ceremony 8 11pm Weekend (Prime) 4 days X 10 hours X $8M $320M
Advertising Opening/Closing 2 events X 3 hours X $8M $48M
Prime Time Mon to Fri 7 11pm; Sat Sun all Total $928M
day, Opening and Closing
ceremonies
Non Prime Time Mon to Fri all other times
Adv. slot duration 30 seconds
Prime Time adv. slot cost $400,000
Non Prime Time adv. slot $200,000
cost

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Case #30: PyeongChang Winter Olympics (4/4)
Recommendation
Additional Discussion
After calculating revenue, have the candidate brainstorm costs. An Enter a bid of $177M
internal/external framework could be appropriate here. Expected additional revenue opportunities from being a part of the
Olympics might warrant a higher bid as you may be able to expand your
viewership from this opportunity, thereby enabling you to charge higher
FC VC advertising fees
Buildings on-site Contract employees For excellent performance, candidate should mention that client can
Internal
Paying network talent (additional on-site labor) also prevent a competitor from having an event that is hard to
Broadcast Marketing to viewers counterprogram against
infrastructure about Olympics and
events

External Rental property on- Hotels

site Insurance
Rental equipment on- Utilities on-site
site

Risks and Next Steps

There is no breakdown here. Once candidate completes brainstorm, state
that the total accounting cost is $428M. Risks
This yields an even accounting profit of $500M ($928M-$428M). Many Other competitors might enter the bid
candidates will think the case is over; however, we still need to worry Fit of airing the Olympics with network brand and programming
about opportunity cost.
If candidate doesn’t mention opportunity cost, remind them. Here, New technologies disrupting the industry might strongly change the
opportunity cost is $1M per hour of displaced programming ($1M X 146 viewership base (tablets, smartphones) and prevent client from recognizing
hours), or $146M. Economic profit is $354M ($500M-$146M). predicted ad revenue as advertisers will shift their medium to match
Again, many candidates will think final answer is $354M. However, these consumer viewership
cash flows are 6 yrs. in future (case is set in 2012) and need to be
Next Steps
discounted. Discount rate is 12%; through rule of 72 (72/12=6 yrs. to
double), you end up dividing 2018 profit in half. Therefore, in 2012 dollars, Assess whether or not competitors are planning to enter the bid and
profit = $177M. determine what resulting bid strategy should
Candidate should recognize that the max bid the client should make based Complete internal assessment to ensure that network fit matches the
on predicted advertising revenue is $177M. Olympic programming
Do a customer survey to understand the potential disruption caused by
new technologies

279
 Quant Level – MEDIUM

Case #31: Quahog Public Schools (1/5) Case Type Industry Client Type

Non-traditional Non-profit/
School System
McKINSEY & CO – Round 1 – Interviewer Led Problem Education

Fit Questions Interviewer Guidance

1. Tell me about a time you worked on a project with a This case is a non-profit case, which pushes candidates to think outside of the box. It is meant to
team and had to convince your team member(s) to go assess their creativity and ability to adapt their thinking to new problems or contexts. The case
along with your idea. calls for a lot of brainstorming from the candidate, but is ultimately driven by the interviewer
2. Tell me about a time you disagreed with one of your asking a series of questions to get to the final recommendation.
work colleagues and how you handled the situation.

Fit Evaluation
Overall Fit Performance
S1 O1 A1 R1
2 2 2 2

Case Prompt Case Development

Our client is the superintendent of a system of schools in Quahog, Rhode Island. He is concerned because the performance of 1. Framework & Exhibit 1
students from these schools in standardized tests has been repeatedly subpar. He has asked us to help him figure out what to 2. Specific Issue Brainstorming
do about it. 3. Quantitative Problem-solving
4. Final Recommendation
Additional clarifying information (provide only if asked):
Q: What is a “system of schools ?
A: For example, Chicago Public Schools
Case Evaluation
Q: What are standardized tests? Structure and Framework
A: Exams that occur at a certain point of the school year for a particular grade level and that are developed and organized by a
school district, state, or other large education agency (ex. end of course exams, SAT). Analytical and Problem Solving Ability

Q: What is subpar performance?

Communication and Positive Attitude
A: On average, a student from Quahog Schools performs below exam mean as compared to national student scores on the
same assessment.
Synthesis and Recommendation
Show Exhibit 1. Candidate should then develop their framework.

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Case #31: Quahog Public Schools (2/5)
Exhibit 1

Quahog Student Performance Relative to National Performance

Quahog Students’ National

Performance Performance

281
Case #31: Quahog Public Schools (3/5)
Case Development
Framework
Students
Attendance rates (e.g., unsafe neighborhoods low attendance or A good framework would consider three or four dimensions, such as those
support poor results) listed on the left.
Demographics (e.g., students from low socioeconomic background
work or take care of family after school low attention to studies; Allow the candidate to discuss their framework. Then, provide the following
race / ethnicity; high need populations such as Special Education or information when asked:
English Language Learners) In response to the candidate’s questions about teachers or the teaching
environment, inform them that it is on par with other schools.
Teachers
Recruitment standards (i.e., do we hire untrained teachers?) If the candidate asks about student demographics, inform them that
Training programs (i.e., do we keep our teachers current in pedagogical students are from low to middle household income categories.
skills?)
Retention rates, especially of high quality teachers If the candidate has not brought out the issue of ‘books’, inform them that
the schools provide books to the students.
Resources
Syllabus or curriculum (i.e., are we teaching appropriate material at the
right level of rigor?)
Access to facilities / resources (e.g. library, technology, science Interviewer Guidance
laboratories, art, music, gym, school nurse) After the discussion, guide the candidate toward ‘books’ as a major issue.
Book, teaching material, and supplemental supply availability Tell the candidate:
Teaching and learning environment
Early findings suggest the shortage of books has been a major factor
School safety affecting student performance at Quahog. How do you think we can address
Administrative support this?
Aesthetically supportive learning environment (clean, welcoming,
windows, air conditioning) Encourage the candidate to brainstorm and think from multiple perspectives.
Transition Statement: Since the school district is looking to improve This is a classic “what else? situation where you should probe for more and
standardized test scores, I would like to first determine whether all teachers more ideas. A good candidate will bucket his/her thinking into three or so
and students have the necessary resources. It would be great if we had groups. See the following page for a potential answer.
information on current resource distribution by school or grade level.

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Case #31: Quahog Public Schools (4/5)
Brainstorm Response Calculations
Raise money to buy books This is how the candidate could solve the follow-up question:
Fundraising (grants / donations)
Price discrimination to students (students who can pay, buy books Shortage:
through school) Total shortage = 8,000 books
Arrange for new books without additional money Math shortage= 60% * 8,000 = 4,800
Science shortage = 40%*8,000 = 3,200
Gifts (in-kind donations)
Borrow from other school systems Benefit:
Partner with Amazon / retailers for used books as a philanthropy Amazon partnership = 70%*4,800 = 3,360
measure on their part Coordinated sharing = 20%*3,200 = 640
Manage with current number of books in system Total benefit = 4,000 books
Coordinated book sharing system
Scan / copy books Note: a strong candidate will do the following:
Spot the pattern in percentages:
Total benefit = 70%*60% + 20%*40% = 42% + 8% = 50% = 4,000 books
Follow-Up Question
Focus on the “so what? of the benefit by discussing why this is
After the brainstorm discussion, state and ask the following:
important to the overall case question.
An immediate area of concern is Grade math and science books. We’ve
identified a shortage of 8,000 such books. Sixty percent of these books are
math books and the rest are science books. The math books are available on
Amazon, but the science ones are not. By partnering with Amazon, we can
reduce the shortage of math books by 70%. Independently, by coordinated
book sharing, we can reduce the shortage of science books by 20%.

What is the total impact of these plans?

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Case #31: Quahog Public Schools (5/5)
Recommendation
Final Question
After the candidate has finished presenting their calculations, ask this final Preliminary analysis has shown that shortage of books is the leading indicator
question: of subpar student performance in Quahog Schools.
We have identified several ways to reduce effective shortage, in three
You meet the superintendent in the hallway and they ask you what you have categories: fundraising, arranging books without additional cash, and
found so far. What will your response be? managing with same number of books.
Our estimates indicate that we can reduce the grade 6 book shortage by
Note: Strong candidates will spot that this is the ‘recommendation’ question, 50% with two of these initiatives: partnership with Amazon and a
and will be comfortable verbalizing their recommendation in a structured coordinated book sharing arrangement.
way.

Risks and Next Steps

Risks
The other 50% (remaining shortage of 4000 books) will not be easily
addressed
Student performance may not rise sufficiently by reducing book shortage
There may be other causes of poor performance which are impactful and
need to be explored

Next Steps
Create plan to reduce remaining book shortage
Quantitatively estimate impact of reduced book shortage on student
performance
Explore other drivers of subpar student performance (teacher training and
retention, curriculum rigor, school learning environment, etc.)

284
 Quant Level – MEDIUM

Case #32: Retirement Apartment Complexes (1/6) Case Type Industry Client Type

Profitability / Property
Real Estate
UNDISCLOSED – Round 1 – Candidate Driven Market Entry Management

Fit Questions Interviewer Guidance

1. Tell me about a time you used data to solve a problem This case will require candidates to focus on profitability analysis, within the context of new
and to convince someone of your solution. market entry considerations. Strong candidates will bring structure to their quantitative
2. If you receive multiple offers, how will you pick a Firm? analysis, in order to keep information organized across a set of options. While candidates will
be tempted to round during math calculations, this is one case where the answers could be
impacted by doing so and thus rounding should not be permitted.

Fit Evaluation
Overall Fit Performance
S1 O1 A1 R1
2 2 2 2

Case Prompt Case Development

1. Framework
Our client owns and operates 25 retirement apartment complexes for the 55-75 year old demographic. The apartment 2. Math Question
complexes are in the Southeast and Southwest states of Florida, California, New Mexico and Arizona. 3. Brainstorm
4. Recommendation
The main goal for the client is to maximize profitability, so the client company’s CEO is considering expanding into
Northern states. As a pilot, the client built an apartment complex in downtown Chicago two years ago. By and large,
the client's apartment complexes have similar designs and amenities. However, the new complex in Chicago has more
amenities than the client’s properties in the South. Case Evaluation
Structure and Framework

What are the main factors the CEO should consider for growth in the US?
Analytical and Problem Solving Ability

Communication and Positive Attitude

Synthesis and Recommendation

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Case #32: Retirement Apartment Complexes (2/6)
Additional Case Information
Provide the information below if requested.

Demand in the North

A survey of pre-retirees and retirees across a number of states, including New York, New Jersey, Massachusetts and Illinois, revealed an unmet demand in the
North for retirement facilities. Retirees wanted options that would allow them to stay close to their families and friends.

Competition
In the South competition is fierce. In the North, competition is fragmented or nonexistent.

Revenues
In the South, rent includes maintenance, amenities, and utilities.
In the North, rent further includes charges for access to a 24-hour on-site medical facility.
For the purposes of this analysis, buildings within a region can be considered identical.

Amenity Differences
The pilot building in the North offers 24-hour access to a medical facility in the complex.

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Case #32: Retirement Apartment Complexes (3/6)
Framework

Retirement facility industry Market entry considerations Profitability (North vs. South) = R - C
Market size/growth Startup/construction
By region costs - build vs. buy? Revenue Costs
Other segments Marketing needs/launch Rent Fixed costs
(demographics, type of care strategy # of units Property management
needed) Client fit for expansion in Occupancy rate contract/labor
Trends/retiree preferences new region # of bldgs. and regions Amenities
Proximity to family Construction and Utilities, if managed by building co. Admin and marketing
Integrated health services property mgmt. Premium for amenities, if any Lease and property taxes
Low tax states relationships Retail revenue, if applicable Maintenance (bldg.-wide
Urban vs. suburban/rural Barriers to entry Building maintenance fees i.e. HVAC)
Competitor landscape Regulation Building-wide utilities
By region within industry Access to financing Variable costs
From other types of property Time to breakeven Maintenance (i.e. per unit
use (multi-family housing, wear and tear costs)
condos, assisted living Utilities (per unit)
facilities)

Transition statement: In order to evaluate the options on the basis of profitability, we need to
understand the cost differential between complexes in the South and the pilot complex in the North.

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Case #32: Retirement Apartment Complexes (4/6)
Math Questions Interviewer Guidance
1. Which region generates more profit per building in the short-term? In To challenge candidate, don’t provide units per building figure until
the long-term? candidate requests it.
2. How do the profit margins compare between the regions? If needed, prompt candidates to compare profit margins in addition to
profits per building.
Candidates may want to round however, in this case, rounding may
affect their answer. Request that the candidate complete the calculations
Information to provide to candidate: without rounding.

Occupancy rates See next page for calculations.

Occupancy rates for new complexes typically start around 90%. Over time,
they have tended to settle out around 80%. The pilot building in Chicago is still
seeing a 90% occupancy rate. Sample Takeaways
Profit margins in the South are higher across the board.
Profitability in the first couple years after an expansion, when occupancy
Per Building, Per Month South North
rates are 90% in both the North and South, is significantly higher in the
Units/Building 800 400 South.
Rent revenue/Unit $500 $1000 If the North’s occupancy rate holds, profitability per building would
be commensurate with the South in the long run -- could provide good
Maintenance costs/Unit $125 $200
diversification benefit for company.
Amenities $48,000 $56,000 Occupancy trend in pilot building should be monitored.
Utilities $38,000 $45,000 Potential to add medical facilities in Southern buildings, given
demonstrated willingness to pay for those services in the North.
SG&A $80,000 $64,000
Medical Facility $0 $55,000
Note: Maintenance costs/unit are incurred regardless of occupancy.

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Case #32: Retirement Apartment Complexes (5/6)
Math Solution

South North

Occupancy 80% (current buildings) 90% (given expansion, 80% (if rate falls to 90% (current pilot rate)
first couple years) match Southern trend)

Revenues per month $500 * 800 * 80% $500 * 800 * 90% $400 * 1000 * 80% $400 * 1000 * 90%
= rent * # units * occupancy
rate = 320K = 360K = 320K = 360K

Costs per month 48K + 38K + 80K + (125 * 800) = 166K + 100K 56K + 45K + 64K + 55K + (200 * 400) = 220K + 80K
= FC + VC
= 266K = 300K

Profit per month 320K 266K 360K 266K 320K - 300k 360K 300K
=R-C
= 54K = 94K = 20K = 60K

Profit margin 54/320 = 27/160 94/360 = 47/180 20/320 = 1/16 60/360 = 1/6
= Profit/R (long divide) (long divide) (half of 1/8)
= 16.875% = 26.11% = 6.25% = 16.67%

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Case #32: Retirement Apartment Complexes (6/6)
Brainstorm Question Request for Recommendation
What are the benefits and risks to entering the market in the North? What is the recommendation for the client?

Sample Brainstorm Structure Recommendation

Build out market entry plan in the North to obtain first mover advantage, pilot
medical facility renovation in the South
Benefits Risks Profit margin is equivalent in new Northern market (ST) as established
Southern market (LT) at ~16.8%
Market share First mover advantage in High level of fragmentation may be function of
the North given low underlying fundamentals or regulatory barriers High customer WTP for amenities, such as a medical facility, indicates
competition levels market opportunity for upgrades in current facilities and inclusion in any
new Southern expansion; high profit margin for new Southern expansion
Profitability Potentially higher Uncertainty on occupancy trends
occupancy rates Higher willingness to pay / occupancy
allows for such facility upgrades
Higher proven may be impacted more in a recession
willingness to pay for Costs may increase disproportionately Risks
amenities over time (minimum wage laws, taxes)
Diversification benefit Opportunity cost from tying up capital in Drop in occupancy rates in North
for company as a North instead of Southern expansion / Startup costs in Northern expansion
whole, in the event of medical facility expansion Cost of medical facility renovation
regional recessions Startup cost overruns
No interest and / or capability to pay for medical facilities in South

Next Steps
Operations New build allows for Uncertainty on new build timelines, zoning, Conduct market survey for occupancy benchmarks in North
updated amenities, licensing, subcontract relationships, etc. Negotiate long-term contracts with contractors
adoption of best practices
Price out medical facility renovation
Survey residents in Southern facilities for interest in medical facility

290
 Quant Level – HEAVY

Case #33: Skylight Goods (1/10) Case Type Industry Client Type

Operations Industrial Goods Manufacturing

BCG – Round 1 – Candidate Driven

Fit Questions Interviewer Guidance

1. Tell me about a time you’ve had to communicate This is a profitability case that tests candidates’ quantitative, critical analysis, and self-directing
something difficult to a client. How did you do that? skills. Push the candidate to drive the case.
2. Tell me about a time when you built consensus for an
idea you proposed.

Fit Evaluation
Overall Fit Performance
S1 O1 A1 R1
2 2 2 2

Case Prompt Case Development

Our client, Skylight Goods, is a $12B industrial goods manufacturer. They have various divisions and the division they 1. Framework
are working with makes pressure sensitive self adhesive canvases for sign boards. This division has seen revenues 2. Profitability analysis: Costs
stagnate over the past few years and profitability has declined. 3. Operations analysis: Distributors
4. Recommendations
Skylight has engaged BCG to help them with this issue. The two questions facing them are:
1. How can skylight improve profitability?
2. Should the client change its delivery channels? Case Evaluation
Structure and Framework
Note: Candidate should answer these questions sequentially. The first question tests costs; the second tests top-line
growth.
Analytical and Problem Solving Ability

Communication and Positive Attitude

Synthesis and Recommendation

291
Case #33: Skylight Goods (2/10)
Interviewer Guidance
To understand what the product is, think of any sign board that you see. One part of the signboard is the metallic post that holds the board up; upon that
board you can stick our client’s product. Skylight’s customers buy blank canvases from Skylight, print their signs onto the canvas and then simply paste the
canvas over sign boards, just like you would paste a normal sticker

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Case #33: Skylight Goods (3/10)
Interviewer Guidance
Provide the following information if the user probes:
1. Revenue has stagnated at about $100M per year.
2. Price has not changed. Since this is an undifferentiated product, there are no opportunities to increase or decrease price.

Provide the following descriptions only if the candidate asks.

About Skylight Goods

Skylight positioning: Skylight is among the largest market share holders in the pressure sensitive self-adhesive canvas market. Skylight has been in this
industry for a long time and has an established brand. Skylight has grown through acquisitions and has a few manufacturing plants that it has acquired.
Geography: Skylight supplies the entire US.
Product Mix: Assume that there is only one kind of product in the client’s product mix. There are no opportunities to change this.
Objective of the case: The client has already asked us whether they should look at improving their distribution channels.

If the candidate asks, provide this information. Otherwise, provide after the framework has been presented by the candidate.

The Market
There are 2 other big players. Skylight and each of the two big players have about 25% of the market each; the rest is fragmented.
The market is growing at 3% (strong candidates should figure out that this is an industry growing as fast as the GDP grows).
Our competitor’s products are very similar to ours and are priced similarly too. Our competitors do not have any differentiation when it comes to product,
promotions, or price.

Discussion of candidate’s framework should identify that there are no opportunities on the revenue side. The candidate should then explore costs. So:
Provide Exhibit 1 when asked about costs. With Exhibit 1, candidate should conclude that the only cost that is increasing significantly is the manufacturing
cost.
When candidate asks for more information about manufacturing costs, provide Exhibit 2. Otherwise, drive the candidate towards manufacturing costs and
then provide the exhibit.

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Case #33: Skylight Goods (4/10)
Framework Framework Discussion
As the case presents a clear question on profitability and one on delivery,
Market Profitability the candidate’s framework should include both dimensions.

Growth Revenues Additional information to be shared with candidate if they ask:

% share held by Skylight Goods Price (unchanged) Pricing and product mix/differentiation are irrelevant to this case due to
Quantity an inability to change prices for a singular, undifferentiated product.
Competition Product Mix
Refer to page 3 and then proceed to Exhibits 1 & 2 for further information
New entrants Channel Mix
to be shared with candidate.
Number of competitors Promotion
Differentiation Number sold
Price Expenses
Substitutes Fixed Costs
Operations PP&E/Manufacturing
Delivery channels Variable Costs
Distribution center locations Labor
Customer locations Raw Material
Service levels Glue
Vendors Paper
Cost efficiencies

Transition statement: Since there is no change in price and the product is

undifferentiated in the market, it is clear that costs are decreasing client
profitability. I would like to test this by digging into the VCs associated with
manufacturing.

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Case #33: Skylight Goods (5/10)
Exhibit 1

Skylight Goods Income Statement (in $ Millions):

295
Case #33: Skylight Goods (6/10)
Exhibit 2

Manufacturing Costs

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Case #33: Skylight Goods (7/10)
Interviewer Guidance Sample Response
With Exhibit 2, also provide the explanation below regarding the After reviewing Exhibit 2, candidate should conclude that there might be
manufacturing process: something going on with the number of employees and additional hours
that showed significant increase.
The product is sold by the yard. The way the process works is that the raw Skylight Goods has produced the same length of canvas per year, but their
materials are fed into the machine for a pre-set run length, where run length = average run length has been decreasing, number of employees increasing,
length of canvas produced in the run. The machine runs for that period, and employee overtime increasing. Inventory turns has also been
generates the pre-set amount of canvas, and then stops and needs to be set increasing.
up again for the next run. The decrease in run lengths was done to reduce inventory, but it has, in
turn, caused inefficiencies in the manufacturing process.
If asked, provide candidate with the following information:
Skylight goods has heard about inventory management and they have
learned that a high inventory turn is generally good for the company.
Inventory turn = total volume / average inventory (candidate should infer
that average inventory has been decreasing).
Skylight Goods has sought to increase inventory turns because they feel
that the demand in the market for these canvases is uncertain. So they’re
unwilling to keep inventory indefinitely.
The product can be kept in inventory for long periods and Skylight already
has capability to store them.

If candidate asks why the client feels that the market demand is uncertain, say
that it’s what a different consulting firm has told them.

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Case #33: Skylight Goods (8/10)
Question 1 Question 1: Continued
Using the information I gave you, how inefficient is Skylight Goods today in The candidate should ask whether it’s possible to produce more than -
comparison to 2004? yard run lengths. If so, provide the following:
For brainstorming, ask for ways to benchmark efficiency before calculating. It is possible to go up to 1500 yards per run. Calculate yards per minute at
Ways to do this include estimating additional hours paid / year and total time 1500 yards per run and determine what the improvement in efficiency is
needed to produce the material. over 2004 and 2006 in yards run per minute.
Sample calculations:
2004 Sample calculations:
Average run: 1000 yds / 25 yds per minute = 40 minutes 1500 yard run
Setup time: 20 minutes Average run: 1500 yds / 25 yds per minute = 60 minutes
Total time: 60 minutes to produce 1000 yds Setup time: 20 minutes
Speed: 1000 yds / 60 minutes = 16.67 yds per minute
Total time: 80 minutes to produce 1500 yds
2006 Speed: 1500 yds / 80 minutes = 18.75 yds per minute
Average run: 500 yds / 25 yds per minute = 20 minutes
Setup time: 20 minutes Improvement calculation
Total time: 40 minutes to produce 500 yds 2004: (18.75 / 16.67) 1 = 12.48%
Speed: 500 yds / 40 minutes = 12.5 yds per minute
2006: (18.75 / 12.5) 1 = 50%
Conclusion:
To produce 1,000 yards in 2006, Skylight will need 80 minutes, 33% more than
2004. Efficiency is down 33%. Conclusion:
It is clear that 1500 yards per run is an improvement in terms of yards run per
minute, increasing efficiency by 12.48% and by 50% over 2004 and 2006
production, respectively.

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Case #33: Skylight Goods (9/10)
Question 2 Interviewer Guidance

At this point, candidates should move on to the question on The candidate should deduce based on their analysis which
distribution channels. Interviewer should provide directional distribution factors are the most important and should be
guidance as needed. supported based on case evidence. Candidate response should be
structured to demonstrate thinking.

What factors would be important when considering changing

distribution channels or networks? Recommendations can include:
Skylight should engage more distributors in the other regions.
Provide if asked: Skylight should move its existing distributors to be more
Currently, Skylight Goods works with two distributors who sell proximal to the customers
the canvases to end customers. One distributor is based on the
west coast and another is based on the east coast. Customers
generally prefer distributors close to them in terms of distance.
Our competitors use several distributors across all regions.
The distributors, whether for Skylight Goods or for the
competition, work on standard percentage of sales.
Most distributors are open to stocking multiple brands.

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Case #33: Skylight Goods (10/10)
Recommendation
Risks and Next Steps
Restore profitability by increasing run lengths Risks
Our profitability has declined because we have reduced our average run Running machines at capacity may result in more wear and tear, resulting
length from 1000 yards to 500 yards. This has reduced our efficiency by in added maintenance expenditures
33%. Engaging new distributors may make our existing distributors unhappy
To restore profitability, Skylight Goods should aim to increase run lengths Potential increases in inventory holding costs due to longer run lengths
to the maximum of 1500 yards per run. This will increase their efficiency
by 12.5% over 2004 results and by 50% over 2006 results. Next Steps
Review current preventative schedule for machines and tradeoffs of
Improve revenues with distributor diversification running at capacity
It is possible that lack of distributor locations caused our growth to Identify resources to find new distributors and logistical solutions; revisit
remain stagnant while the market grew at 3%. contracts with existing distributors for geographical exclusivity
We should engage more distributors in geographically diverse regions of Explore reductions in inventory holding costs (less manpower, cheaper
the US, so our customers may be able to source the canvases more vendor to store product) to realize the benefits of increased inventory
easily. This will allow us to both regain our own internal growth and start turns. The reduction of these costs may be enough to compensate for
growing at the market growth rate. increases in manufacturing costs.
Evaluation

A strong candidate will be self-led in narrowing down key areas for

further analysis as well as in performing calculations with data provided
to validate observations and recommendations.
Recommendations should be supported by previously calculated data.
Risks and next steps provide a good opportunity for second and third
level insights regarding possible outcomes of the candidate’s
recommendations.
An excellent candidate will circle back to address the client’s focus on
inventory management.

300
 Quant Level – LIGHT

Case #34: Smart Cards (1/6) Case Type Industry Client Type

Tech, Media &

Growth Strategy Manufacturer
McKINSEY & CO – Round 1 – Interviewer Led Telecom.

Fit Questions Interviewer Guidance

1. Tell me about a time you dealt with ambiguity and the This is a command-and-control style case, where the interviewer leads the candidate through
steps you took to manage the situation. a series of questions. The candidate should maintain an active role in the discussion at all
2. Tell me about a time you had to overcome a times, and should not be thrown off if the interviewer drives the case in a different direction.
challenging situation at work and how you maintained
buy-in from key stakeholders to resolve the situation.

Fit Evaluation
Overall Fit Performance
S1 O1 A1 R1
2 2 2 2

Case Prompt Case Development

Our client, Electronics Inc., is a large diversified Electronics Component manufacturer. One of their businesses is the 1. Framework
manufacture of Smart Cards used by transport authorities (passenger cards). They entered this business 3 years ago. 2. Q&A/ Discussion
The CEO is unhappy with the performance of this business and has asked McKinsey for help. What areas will you 3. Interviewer Questions
explore?
Additional detail that can be provided in response to candidate follow-up questions:
The focus is on the US market.
The client manufactures both Smart Cards and Card Readers. Customers for these are primarily transport Case Evaluation
Structure and Framework
authorities (e.g.: CTA).
The client also manufactures chips and custom electronic components.
Analytical and Problem Solving Ability
The client’s Smart Card business has experienced low revenue growth and recent customer complaints.
The CEO is considering whether to spin off or to sell the Smart Card business.
Communication and Positive Attitude

Synthesis and Recommendation

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Case #34: Smart Cards (2/6)
Framework
Question 1
Our main customers are transport authorities. How might you segment them?
Smart Card Market Competition Examples: by revenue, margin or geography.
Size/Growth Who (substitute manufacturers,
next gen apps) An example of revenue-based segmentation could be Tier 1 transport
Customer segments
Trends in adoption/tech Market share/growth of share authorities (NY, Chicago, SF) vs. Tier 2 (mid-sized cities).
Competencies If needed, lead candidate to revenue-based segmentation before
transitioning to the next question.
Client’s Smart Card Business Product and Product Support
Customers Price vs. WTP
Value chain Quality (reliability, product life,
Synergies with other ease of integration with other
business lines systems, cost for updates,
security)
Delivery
Customer service
Servicing, replacement,
maintenance
Question 2

Great. Industry professionals do generally segment by revenue. Now what?

The candidate should want to understand how the client does in each
Transition statement: To understand the client’s growth challenges and segment compared to their competitors.
potential options for the Smart Card business, I’d first want to better Once they reach this insight, provide them with Exhibit 1.
understand the Smart Card Market and our client’s position in it.

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Case #34: Smart Cards (3/6)
Exhibit 1

Market Segment Penetration

Smart Cards Electronics Inc.

Competitor A Competitor B Others
Segment Penetration in (Client)
share share share
Segment share

Tier-1
100% 15% 40% 45% 0%
(10 customers)

Tier-2
10% 0% 2% 8% 0%
(70 customers)

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Case #34: Smart Cards (4/6)
Chart Clearing Question 3
Sample Insights from Table What do you think the key purchase drivers in this business are?
This is a concentrated market, with only 3 players. (i.e. Why would a customer choose one player over another?)
We are the weak third player in the market.
Our competitors have a significant advantage in the Tier-1 segment. Sample Answer
We should consider what is needed to grow share in this segment. Cost
There may be opportunity in Tier-2. Per unit price (card reader, smart card)
This Tier may not be profitable though, considering the low Replacement / maintenance / upgrade costs
penetration rate to date. Package pricing options of card reader + smart card Key
Driver
Note: A strong candidate will realize the last point regarding penetration rates Quality/service
and provide next steps when considering whether to pursue any opportunity Reliability of tech Key
in Tier-2. Driver
Security
Customer service
Proven adoption in similar markets

Flexibility
Switching costs (i.e. contract terms)
Ease of integrating with other tech / systems

Note: A strong candidate will identify key drivers and rank or prioritize these
answers in some way.

If asked, tell the candidate that all players in the market have parity on
everything except reliability.

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Case #34: Smart Cards (5/6)
Question 4 Question 5
As mentioned earlier, there have been some recent customer complaints. As a Upgrading reader quality to 99% reliability will require a $10M investment.
result, some of the client’s current customers are considering moving to other Based on this information, what do you think the client should do with the
vendors. All the players in the market have parity on all the purchase drivers business?
except reliability.
Note: The candidate might want to do a cost-benefit analysis, but a strong
Here is some relevant data (read or show to candidate): candidate will hypothesize that it may not make sense to upgrade since we
Electronics Inc.: Reader Reliability 90% Card Reliability have such a low market share and face two dominant players who already
75% have 99% reliability.
Competitor A: Reader Reliability 98% Card Reliability
60% Sample Response
Competitor B: Reader Reliability 99% Card Reliability This is a platform strategy where “winner-takes-all within each geography,
70% and all Tier 1 geographies are saturated.
For Tier-1 customers, the client is worse off than Competitor A and B. The
What are your takeaways from this information? client has reliability issues and no superior “value-proposition in any other
substantive respect.
Sample Response There are demand-side economies (proof of concept with more established
Reader reliability is much more important than card reliability. customer base) and supply-side economies (scale, lower infrastructure
Cards can be easily replaced, but reader failure can shut down the entire costs) that provide the established competitors with additional advantages.
system. There might be an opportunity in the Tier-2 segment, and the client should
Client should explore the possibility of improving reader reliability since explore this possibility. However, given that the other competitors haven’t
it threatens the integrity of the system. targeted a larger share of Tier 2, it could simply be unprofitable.
Client appears to have a small card reliability advantage. Unless a profitable solution can be developed for Tier 2, the client should
May be an advantage that can be better monetized if it is delinked from exit the market and sell off assets to Competitor A or B.
the card reader product.

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Case #34: Smart Cards (6/6)
Synthesis 6 (Bonus)
Question
How would you find out if there is an opportunity in the Tier-2 segment? Since this case is light on quant, the interviewer should use this opportunity to push
the candidate to synthesize their thoughts and to provide a recommendation orally,
including risks and next steps.
Sample Response
The client should go to the Tier 2 customers and find out why they have Recommendation
not adopted smart cards. Unless a profitable solution can be developed for Tier 2, the client should exit the
The insights from this investigation could potentially be used to develop a market and sell off assets to Competitor A or B.
better solution for Tier 2.
Risks
For instance, the client might find that Tier customers don’t need and If the client enters the Tier 2 market, they may expose themselves to risk of an
don’t want to pay for the full-scale product offered to Tier 1 customers and unprofitable venture.
might be willing to consider a cheaper, functional system. In this case, the
client should consider the possibility of providing a cheaper “lite solution Next Steps
to the Tier 2 customers. This could be mitigated by first analyzing the customer in this segment and
. determining whether the client can better meet Tier 2 customer needs as
compared to current competitors. However, if the client cannot do this, it is best
to divest themselves of the card reader and smart card assets.

Evaluation

Candidate performance differentiators:

A framework suited to this case exploring the industry and competition,
not profitability.
Realizing that the Tier-2 segment may be unprofitable to serve.
Recognizing that reader reliability is more important for integrity of the
system.
Understanding the “winner-takes-all nature of this business.
Answering the original question of “what to do sell-off assets to a
competitor and exit. This can be a difficult insight because it is
counterintuitive to tell a client to give up on a business or line of business.
However, it is important that it not be overlooked, as sometimes the best
answer is not the one that will result in the most growth.

306
 Quant Level – MEDIUM

Case #35: Student Health Insurance (1/11) Case Type Industry Client Type

Financial Services &

Growth Strategy Insurance
DELOITTE – Round 2 – Interviewer Led Insurance

Fit Questions Interviewer Guidance

1. When did you make a lasting impact on a team? This case tests a candidate’s ability to engage in structured brainstorming and interpret large
2. If I asked your last boss why I shouldn’t hire you, what volumes of data. Strong candidates will be extremely diligent about structuring their
would they say? responses. The interviewer should note that the sample responses included here are not the
only successful responses.

Fit Evaluation
Overall Fit Performance
S1 O1 A1 R1
2 2 2 2

Case Prompt Case Development

Our client is a business unit within a large national health insurance company. The client focuses primarily on the 1. Framework
higher education student health insurance market, selling medical insurance, prescription drug insurance and dental 2. Multiple Discussions/Q&A
insurance to students at large universities. The client is the market leader, both in terms of customers (~500K) and 3. Multiple Recommandations
revenue (~$500M). The overall market for higher education student health insurance is estimated at 2.5M potential
customers and $2.2B in potential revenue.

This market requires a unique, two-staged sales model. The “first sale is often made to the on-campus student health
Case Evaluation
center to gain access to the student population. The “second sale is to the students, who are the ultimate purchasers
Structure and Framework
of the insurance products. In certain segments of the market, a broker may also act as an intermediary to the school.
Analytical and Problem Solving Ability

Communication and Positive Attitude

Synthesis and Recommendation

307
Case #35: Student Health Insurance (2/11)
Case Prompt: Continued
The client’s operating margins have declined significantly in the face of aggressive competition and shrinking higher education budgets. Additionally, health
care reform presents a potential risk for future growth and profitability notably, students age 26 and under can remain on their parents’ health insurance
(versus having to buy student health insurance), and health insurers will be required to spend 80% of all revenue on medical expenses. The client’s current
operating margins are 9%, down from 25% five years ago.

Deloitte Consulting has been engaged to identify profitable avenues of growth for the client as a part of the client’s three-year growth strategy. Additionally,
we have been asked to deliver prioritized recommendations on potential growth strategies.

Case Questions:
The following questions are provided on subsequent pages in the order that they should be revealed to the candidate. Do not share all questions with the
candidate up front, as each question is meant to be a mini-case. A traditional framework will not be needed for this case, but the candidate should remain
structured in their thinking and in their responses throughout the case.

1. Brainstorm: What are the potential avenues of growth for the student health insurance company?
2. Chart Clearing: What are some of the key trends that you see on the data sheet (Data Sheet 1)? Based on these trends, what are the potential
avenues of growth for the student health insurance company?
3. Brainstorm: Our client felt a large part of the addressable market was not being addressed (the small school market). They specifically wanted a
strategy for moving “down market and going after smaller schools. At a high level, what qualitative and quantitative criteria should the client
consider when assessing this market?
4. Quantitative Analysis: Our primary concern related to the attractiveness of the small school segment was whether healthy operating margins
could be achieved. What type of information would you need to calculate operating margin percentage for this segment? What is the operating
margin percentage for each of the four product / customer scenarios?
5. Recommendations: Given the outcome of your previous operating margin analysis, what recommendations would you develop for the client in
terms of pursuing the small school market?
6. Synthesis: Ultimately, multiple opportunities were identified for the client to grow, including increasing share in the core market, pursuing small
schools and selling new products to schools and to students how would you evaluate the opportunities and prioritize them?

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Case #35: Student Health Insurance (3/11)
Question 1 Sample Response
What are the potential avenues of growth for the student health insurance
company?

Interviewer guidance: Products/Business Models

This question was intentionally developed to assess the candidate’s ability Existing New
to deal with ambiguity and provide a variety of solutions based on their Identify new segments / channels to Target non-consumers (uninsured),
academic and professional experience. sell existing products tailoring product scope to address
Pursue small school segment barriers to entry (i.e. emergency plans
Look for the candidate to provide structure in assessing the growth
(universities) for cost-conscious consumers)
opportunity. Ne Pursue secondary schools (private
If the interviewee starts listing random opportunities, ask how they would w / charter schools) to capture
structure an approach to devising ideas. transition to college

Customers/Markets
A sample response is provided to the right. This framework is one of Pursue individual students where
several potential avenues a candidate might take towards answering this schools do not offer insurance
question. The interviewer should evaluate the candidate’s ability to create
a high level structure and to flesh it out with more granular insights. Defend and grow the core business Develop new products for students AND
Optimize price schools customers
Enhance marketing and sales Capture student wallet share for
force effectiveness to increase adjacent insurance products (tuition
penetration insurance, electronics insurance,
Ex Apply pricing strategy to steal auto insurance, renters insurance,
ist share in the large school market etc.)
in Develop additional areas of Consider adjacent health services for
g differentiation (functionality, current students (mental health,
reliability, convenience) wellness)
Consider adjacent services for health
centers (billing)
Develop digital applications to
provide remote health services

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Case #35: Student Health Insurance (4/11)
Question 2 Sample Response
Provide the candidate with Data Sheet 1 (next page). Charts
1: Lower enrollment schools (<10K students) have a significant portion of
Ask the candidate: students (42%) fragmented across thousands of schools.
What are some of the key trends that you see on the data sheet?
2: The client earns the vast majority of its revenue from schools with more
Based on these trends, what are the potential avenues of growth for the than 10K students.
student health insurance company?
1 & 2: There is an opportunity for the client to diversify its current revenue
Interviewer guidance: base by pursuing the small school market, which is comprised of almost 90% of
Ask the candidate to synthesize their comments and provide additional all schools.
recommendations (a strong candidate will draw insights from these trends
without being prompted). 3: The client is not well diversified in terms of number of products driving
revenue.

4: The client has difficulty selling its ancillary products to both students and
schools that purchase the medical product.

3 & 4: There is a significant opportunity to grow revenue by increasing the

penetration of non-core products.

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Case #35: Student Health Insurance (5/11)
Data Sheet 1

311
Case #35: Student Health Insurance (6/11)
Question 3 Sample Response
Our client felt a large part of the addressable market was not being addressed
(the small school market).

They specifically wanted a strategy for moving “down market and going after
smaller schools. At a high level, what qualitative and quantitative criteria Criteria Qualitative Quantitative
should the client consider when assessing this market? Market size Segment the market to understand Quantify revenue potential by
potential customer behavior considering # of schools, # of students,
Consider key factors in insurance insurance requirements, and premium
Interviewer guidance: buying behavior projections by segments developed
Interviewee should recognize this is a market attractiveness question and
provide relevant criteria for assessment. Market Assess maturity of the market Historic market growth rates
growth Consider market trends and healthcare Model projected number of schools
The market attractiveness criteria and corresponding comments provided
reform currently in the market and likelihood
to the right are NOT exhaustive. Look for the candidate to touch on many to join
of these areas, and possibly offer other areas for investigation. Competitive Conduct customer interviews, focus Market share analysis
The interviewer should again focus on the candidate’s ability to provide a intensity groups, voice of the customer analysis Win/loss rates for sales
structured, detailed response. Conduct competitor assessment
Strategic fit Determine how strategy required to N/A
win in new segment (cost versus
differentiation) aligns with existing
business strategy
Capability Understand future state capability Requisite investments (capital
needs needs from the new market expenditures) to enter the new market
Conduct gap analysis
Profitability Interview potential clients to develop Model potential margin scenarios
understanding of revenue and cost based on various revenue, market size
assumptions and cost structure assumptions
Likely Assess customer needs in the market Model sensitivity analysis based on
penetration / Consider client’s current share in other market growth, competitive intensity,
market share segments margin and pricing requirements

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Case #35: Student Health Insurance (7/11)
Question 4: Part 1 Question 4: Part 2
Our primary concern related to the attractiveness of the small school segment Provide candidate with Data Sheet 2.
was whether healthy operating margins could be achieved.
What is the operating margin percentage for each of the four product /
What type of information would you need to calculate operating margin customer scenarios?
percentage for this segment?
Response (see next pages for complete calculations):
Sample Answer: Option Operating Margin %
Cost structure of the company (fixed versus variable)
1 5.5%
Product pricing
Penetration (number of customers) 2 3.0%
Total revenue 3 0.5%
4 (2.0%)
Interviewer Guidance:
Do not provide candidate with Data Sheet 2 until they provide some ideas in
response to the question. Follow-Up Question:
What observations or trends do you notice about the cost structure?

Sample responses
Fixed costs are more tenable with larger customers.
Higher priced product cuts variable costs in half.
Medical expenses / selling expenses are fixed regardless of the school size
or product.

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Case #35: Student Health Insurance (8/11)
Data Sheet 2

314
Case #35: Student Health Insurance (9/11)
Question 4: Sample Response
Using Data Sheet 2, the interviewee should calculate the expected costs under each of the four scenarios and then calculate the operating margin percentage.
They will need to calculate the number of customers in each scenario and apply the fixed and variable costs.

Avg. Annual Customers

Premium Revenue (Students per Operating
Option Product Sold per School school) Medical Expenses Selling Expenses Setup Costs Admin Costs Total Costs Margin %

Plus 80% 7% 5% 2.5% 94.5%

1 $1,000,000 500 5.5%
($2,000) ($800K) ($70K) ($50K) ($25K) ($945K)

80% 7% 5% 5% 97%
2 Standard ($1,000) $1,000,000 1000 3.0%
($800K) ($70K) ($50K) ($50K) ($970K)

Plus 80% 7% 10% 2.5% 99.5%

3 $500,000 250 0.5%
($2,000) ($400K) ($35K) ($50K) ($12.5K) ($498K)

80% 7% 10% 5% 102%

4 Standard ($1,000) $500,000 500 (2.0%)
($400K) ($35K) ($50K) ($25K) ($510K)

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Case #35: Student Health Insurance (10/11)
Question 5 Sample Response
Given the outcome of your previous operating margin analysis, what
recommendations would you develop for the client in terms of pursuing the
small school market? Prompt Questions
Whether to pursue How to pursue (if required)
Interviewer guidance: OK Client should not N/A Under what
Interviewee likely will not give a simple yes or no answer, but they should Answer pursue the segment conditions should
because it is not the client pursue
identify scenarios under which it would make sense to pursue the market. profitable enough the small school
Use the prompt questions to the right as necessary to draw out a stronger market?
candidate response. Good Client should Reduce SG&A or selling costs through Is there anything
Interviewee should recognize that under the provided cost structure, none Answer pursue the market standard cost reduction methods they could do to
of the scenarios lead to an operating margin that was in line with the if they can apply (business process redesign, contract make the
different levers to renegotiation, etc.) unprofitable
current, overall operating margin (provided in the background section); make it more The interviewee may suggest price small market
better answers will center on finding ways to make the market viable (by profitable increases or reducing medical costs, but segment more
applying levers to improve profitability or inventing a new business model). it’s important to note that neither is attractive?
possible under current health care
reform
Strong Client should Create an online B2C model that sells What kind of
Answer pursue the market directly to students and bypasses the business model
with a different two intermediaries (brokers and would be
business model schools) similar to other industries appropriate for
that have transitioned into direct, this market?
online distribution (e.g. books, airplane
tickets, etc.)
Other ideas

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Case #35: Student Health Insurance (11/11)
Question 6 Sample Response
Ultimately, multiple opportunities were identified for the client to grow,
Strategic Impact Competitive differentiation
including increasing share in the core market, pursuing small schools and
and Fit White space / new market opportunity
selling new products to schools and to students. Is there disruptive potential?
Address unmet marketplace needs
How would you evaluate the opportunities and prioritize them? Alignment with current business unit and corporate strategy

Interviewer Guidance: Financial Impact Revenue potential (what is the market size?)
Interviewee should establish a framework for screening or prioritizing What is the expected margin?
multiple opportunities. A sample framework and criteria are provided to the Administrative cost reduction
right to end the case. Future cost avoidance

Note that a traditional recommendation followed by risks and next steps is Necessary Costs Investment (capital) costs
not necessary in this case. Rather, a framework that structures and Ongoing operating costs
synthesizes priority areas from the case discussion is best.
Ease of Alignment with existing capabilities
Implementation Complexity of the change
Availability of partners or acquisition targets

317
 Quant Level – MEDIUM

Case #36: Super Jr. Baby Formula (1/10) Case Type Industry Client Type

Investment Decision Consumer Products Private Equity

BAIN & COMPANY– Round 2 – Candidate Led

Fit Questions Interviewer Guidance

1. Tell me about a time you managed a work conflict. This case tests a candidate’s ability to clear charts effectively and to synthesize a large volume of
2. What is the best feedback you’ve received? Why? information to make a recommendation. A strong candidate will develop a framework that goes
beyond discussion of market conditions and profitability, and they will apply their framework to
drive the case forward.

Fit Evaluation
Overall Fit Performance
S1 O1 A1 R1
2 2 2 2

Case Prompt Case Development

Your client is a private equity firm looking at the baby formula market in China. In particular, they are looking at a 1. Framework
company called Super Jr., which is a Chinese startup founded in 2006. Super Jr. brands itself as a foreign company,
advertising their products as being made and imported from Australia. 2. Discussion/Q&A
3. Chart Clearing/Quantitative
The PE firm would like your help in determining whether they should invest in Super Jr.
Analysis
4. Final Recommendation

Case Evaluation
Structure and Framework

Analytical and Problem Solving Ability

Communication and Positive Attitude

Synthesis and Recommendation

318
Case #36: Super Jr. Baby Formula (2/10)
Additional Information Exhibit 1
Provide the following information in the discussion with candidate. Present the candidate with Exhibit 1 after they have walked through their
framework and have suggested a direction for further analysis (sample
Business Model framework on next page).
Super Jr. currently has no manufacturing capabilities and sources their
product, “Super Jr. Formula, from an Australian manufacturer. Sample takeaways from Exhibit 1:
Super Jr . primarily distributes to regional and local supermarkets. The The baby formula market overall has seen steady annual growth, at 20%
supermarkets currently charge them a fee for stocking their product (for CAGR (tripling the market size in 6 years).
shelf-space usage). This growth rate is strong considering that annual GDP growth in fast-
growing countries like China is around 9% (although the candidate
Brand may not know this, they should feel comfortable commenting that
Super Jr . has spent a lot on marketing and has gained reputation in 20% CAGR is encouraging).
the Chinese market as a “decent brand. If this growth rate continues, the market will more than double in size
in a rather short time horizon (~4 years).
Management Super Jr. is projected to grow from approximately $5M to $60M in the span
The management team at Super Jr . is composed of people who have of 6 years, which is very significant growth.
previously worked in the food sales and distribution industry. Super Jr.’s growth outlook is very optimistic compared to overall
historical market growth rates.
Growth Strategy This means Super Jr. will have to outgrow the market by stealing
The current growth strategy is to continue expanding distribution to share from competitors.
large-format, national retail chains (such as, Walmart), while investing
further in marketing to penetrate the premium segment, allowing them to
price at a premium

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Case #36: Super Jr. Baby Formula (3/10)
Framework

Baby Formula Market Considerations Super Jr. Company Considerations Fit for PE Client
Market size / growth rate Company strategy Ability to hit profitability / ROI targets
Competitive landscape Product / customer segments Synergies with existing PE portfolio
Market share / momentum Growth targets
Competitor value propositions / PE staff capacity to provide management
Organic and inorganic (M&A) support vs. need for management support
business models growth plans
Customer segment growth Opportunity cost from other investment
Profitability options
By region / demographic Pricing strategy / profit margins
Willingness to pay Cost structure
Elasticity/brand loyalty Exposure to cost risks (raw
Trends in product preferences materials, foreign exchange
(organic, imported vs. local, etc.) fluctuations)
Product types
Brand image
Commodity vs. specialty
Profit margin differences Supplier sources
Raw material availability / pricing Channels
Channels Management experience
Infrastructure to support growth R&D

To determine whether Super Jr. is a good investment for our client, we need to determine that:

1. The baby formula market is attractive.

2. Super Jr.’s position in that market is promising.
3. Super Jr. would be a good fit within our client’s portfolio.

Transition statement: My first step is to assess the growth of the baby formula market. Is there any data on the historical
performance of this market?

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Case #36: Super Jr. Baby Formula (4/10)
Exhibit 1

321
Case #36: Super Jr. Baby Formula (5/10)
Math Question 1 Math Question 2
Assuming the same CAGR from 2000 to 2006, what would be the overall Estimate the CAGR Super Jr. expects to achieve between 2006 and 2012.
market size in 2012? Is the projection realistic?

Sample Response: Sample Response:

From the graph, we can see that CAGR of 20% implies a tripling of the market Estimate CAGR using the rule of 72:
size in 6 years. Another 6 years at this growth rate would lead to a further $60M/2 = $30M $15M/2 = $7.5M
tripling of the market size, from $9B to $27B. $30M/2 = $15M $7.5M/2 ~= $3.75M (close to
$5M)
Alternative Response: --> Size doubles almost 4 times in 6 years, or about every 1.5 years
Final Market Size = Initial Market Size * (1 + CAGR)^(# Years) Rule of 72: 72/1.5 = 48%
= $9B * ( 1+ 0.2)^6
= $27B Alternative Response:
CAGR = (End Value/Beginning Value)^(1/# years) 1
Sample estimation process for (1.2)^6: = (60/5)^(1/6) - 1
= (6/5 * 6/5)^3 = (36/25)^3 ~= (35/25)^3 = (12^(1/6)) 1
= (7/5)*(7/5)*(7/5) = (49/25)*(7/5) ~= 2*7/5 = 14/5 ~= 1.5 1 = 0.5 = 50%
= 2.8 --> round up to 3 because of net rounding down during simplifications Note: The actual CAGR calculation results in a CAGR of 51%.

Sample estimation process for (12)^(1/6):

from prior problem we know 1.2^6 = 3, therefore 3^(1/6) = 1.2
(12)^(1/6) = (3*4)^(1/6) = 3^(1/6) * 4^(1/6)
= 1.2 * 4^(1/(2*3)) = 1.2 * 2^(1/3)
~= 1.2 * 1.25 = 6/5 * 5/4 = (30/20) = 1.5

Given the market CAGR is 20% and the projected CAGR for Super Jr. is ~50%, 2.5x that of
the market, this projection will be difficult to achieve since Super Jr. needs to accomplish
this by stealing market share from competitors.

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Case #36: Super Jr. Baby Formula (6/10)
Candidate-Led Next Steps Exhibit 2
Upon completing the quantitative analysis and discussing the results, the Sample Takeaways:
candidate should ask for more information, such as: As a ‘local specialty’ brand, Super Jr. competes in the medium and low
markets.
What are the core competencies of Super Jr. and how do they compare
to competitors (sales, distribution, production)? The medium and low markets are highly fragmented, whereas the premium
brand is much more concentrated.
What particular segment does Super Jr. play in and is it easy to Overall market momentum is being driven by growth in the premium
penetrate and/or gain share in that segment? market.

What do customers demand? Does Super Jr. do anything that

meets/exceeds customer expectations?

The candidate should, in general, ask for information about customer or

product segments or the competitive landscape. When they do, show the
candidate Exhibit 2.

323
Case #36: Super Jr. Baby Formula (7/10)
Exhibit 2

* S pe J . i con ide ed a local pecial compan

324
Case #36: Super Jr. Baby Formula (8/10)
Candidate-Led Next Step Exhibit 3

At this point the candidate should be synthesizing the information to argue Provide the candidate with Exhibit 3 once the candidate has presented some
that Super Jr. is either a good or bad investment for the client. arguments either for or against investment in Super Jr.

Sample Takeaways from Exhibit 3:

Sample Arguments in Favor of Investment: Super Jr. spends most of its resources on marketing and none on R&D.
Super Jr. has an established brand, so it is possible their planned move into Super Jr. has very high raw material costs and zero manufacturing costs
the premium market will be successful, yielding higher growth. (which is to be expected since they source final goods).
Significant fragmentation among Specialty Market players suggests an Prices for local established brands (which compete with Super Jr.) are much
opportunity for Super Jr. to gain market share by acquisition and/or lower, primarily due to lower marketing costs.
aggressive marketing. Input costs (raw materials + manufacturing) are fairly commensurate across
segments.
Sample Arguments Against Investment:
The growth rate of the markets Super Jr. competes in are much lower than Following the discussion, the interviewer should ask the candidate to
their company growth projections. synthesize the results of the case into a final recommendation. This case is
There are very few players in the premium market and, as such, there may very open ended and good arguments can be made either way. As long as the
be unforeseen difficulties for Super Jr. as it attempts to enter this segment. candidate sticks with and supports their recommendation with logical
evidence from the case discussion, the recommendation should be accepted
by the interviewer (sample recommendations on the following pages).

325
Case #36: Super Jr. Baby Formula (9/10)
Exhibit 3

Local Established Super Jr.

Factors Multi-Nationals
Brands

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Case #36: Super Jr. Baby Formula (10/10)
Rec: For Investment Rec: Against Investment
Recommendation Recommendation
Invest in Super Jr.: Don’t invest in Super Jr.:
With a continued emphasis on marketing, Super Jr. can build a Super Jr. doesn’t have any core competency beyond marketing to
reputation in the premium market while gaining market share in the low develop new products and compete in the premium market given that
and medium markets. they do not have any R&D capabilities.
The Super Jr. business model means they have low fixed capital costs and Their growth projections are likely premised at least in part on entering
can be flexible and responsive to the market in their choice of products the premium market, which is highly concentrated and for which their
to source. brand isn’t well-suited yet.
The management team’s experience in food distribution may be a Their business model carries a lot of risk (no R&D in-house, high ‘raw
significant competitive advantage as Super Jr. seeks to grow quickly. material’ costs, single point of failure with their Australian distributor,
As the brand gets more established, marketing expenditures could be exposure to foreign exchange fluctuations).
reduced, thus increasing profit margins.
Risks
Risks Super Jr.’s business model proves to be the best setup to grow quickly in
Breaking into the premium market proves harder than expected this high-growth market
Break-down of relationship with Australian distributor Super Jr. establishes its brand quickly and firmly, decreasing the returns
on any investment in its competitors
Next Steps
Conduct market study of premium market Next Steps
Analyze contract terms with distributor Analyze Super Jr.’s specific plans to hit its growth targets for fit with its
business model
Evaluate Super Jr.’s competitors for potential alternative investment
opportunities and or to determine Super Jr.’s competitive advantage

327
 Quant Level – HEAVY

Case #37: Apache Helicopter (1/7) Case Type Industry Client Type

Market Sizing /
Cost-Benefit Industrial Goods Manufacturer
UNDISCLOSED – Round 1 – Candidate Led
Analysis

Fit Questions Interviewer Guidance

1. Tell me about one of your strengths and one of your This case tests a candidate’s ability to think logically through a cost-benefit analysis between
weaknesses and how these are displayed in a team three option while determining whether assumptions are reasonable. There is no clear right
setting. answer in this case. This is a good case for practicing quantitative reasoning and structured
2. Tell me about a time you had to convince someone of math.
something using data.

Fit Evaluation
Overall Fit Performance
S1 O1 A1 R1
2 2 2 2

Case Prompt Case Development

Our client is a US defense contractor. One of its divisions manufactures Apache helicopters for military operations. 1. Framework
The company is considering setting up a new plant to meet increasing demand in the attack helicopter space. The 2. Market sizing
client is considering three sites for the new plant Brazil, France, and the US. 3. Cost-benefit analysis
4. Final recommendation
They have hired us to help them answer the following two questions:
1) How would you determine the parameters for the decision?
2) Where should they set up the plant? Case Evaluation
Structure and Framework

Analytical and Problem Solving Ability

Communication and Positive Attitude

Synthesis and Recommendation

328
Case #37: Apache Helicopter (2/7)
Additional Information Framework
A good candidate will ask questions in a logical format and specify the A good candidate answers the prompt in the way they set up their
categories they are considering. framework.

If asked, provide the candidate with the following information: Demand Characteristics (understand how much):
The client has 3 plants in the US; 2 in Kansas and 1 in Michigan. Size of increased demand spike
Company Information: Based on location
The plants operate at full capacity today. Market details
One of the US plants can accommodate an additional assembly line at Size
Current margin
the cost of $500M; the other 2 are constrained in residential areas and
cannot be expanded. Facility Capabilities by Region (understand can we do it):
This is the only defense contractor that sells Apache helicopters. Qualified labor
They will only be selling to Brazil, France, or the US. Political stability
International supply chain management
This is the first time that they sell to Brazil or France.
QA of raw materials
Profitability by plant location (select which one is best):
NPV, Breakeven
Revenue
Quantity based on plant location
Price per helicopter
Cost
Investment
FC, VC of production

Transition statement: To best determine where to open a plant, I would like

to first look at the demand by region. Once identified, we can further test
where to establish the plant based on profitability and capabilities by region.

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Case #37: Apache Helicopter (3/7)
Market Sizing / Demand Brainstorm #1
If the candidate does not begin by considering market demand, guide them If the candidate asks about competition, remind them there are currently no
toward this by calculating the increase in demand from the additional plant. other producers of Apache Helicopters. Then, guide them to think about
This is based off of the defense budget for each of the three nations that the costs.
contractor would sell to.
What are the major costs that are associated with the development of the
Provide the candidate the following information as they ask for it: plant and production of helicopters?
Defense budget for the next five years: $100B (US), $15B (BR), $10B (FR)
Countries will dedicate a certain percentage of their defense budget to be There are many ways you can approach this brainstorm. The best way is to
spent on Apache helicopters based on the location of the plant. Provide think of the value chain.
Exhibit 1.
Candidate should conclude their calculations by identifying key takeaways Plant (Opx) Plant Operations
from the data. For example, the highest demand / government spend ($) Development
will occur from a plant in Brazil. (CAPX) Sourcing Production Distribution

Property Materials Assembly Storage (5

Calculation to be performed by candidate: Legal Shipping based Labor (union) years)
Construction on location of Training Shipping
United States Brazil France Qualified labor suppliers QA/QC QA on delivery
Sourcing QA Taxes
Plant in the US 20% * $100B = $20B $0 $0 material

Plant in Brazil 20% * $100B = $20B 50% * $15B = $7.5B $0

Note: Candidates can insert more buckets as they see fit.

Plant in France 20% * $100B = $20B $0 50% * $10B = $5B

330
Case #37: Apache Helicopter (4/7)
Exhibit 1

Defense Budget Over Next 5 Years

Purchases by Brazil Dept. of Purchases by France Dept. of

Purchases by US Dept. of Defense
Defense Defense

Plant in the US 20% of budget 0% 0%

Plant in Brazil 20% of budget 50% of budget 0%

Plant in France 20% of budget 0% 50% of budget

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Case #37: Apache Helicopter (5/7)
Cost-Benefit Information Sample Approach: Helicopters
The candidate can be provided with the information below when asking about The candidate should recognize they need the price per chopper. If they
costs. haven’t identified this, steer them in that direction during the math.
The helicopters sell for $100M a piece.
Initial plant set-up costs: Candidates should then recognize they need to calculate the number of
US: $500M helicopters produced at each plant.
Brazil: $2B
France: $3B
Fixed costs per year: United States Brazil France
US: $100M $20B/$100M = 200
Plant in the US 0 0
Brazil: $100M heli
France: $100M $20B/$100M = 200 $7.5B/$100M = 75
Plant in Brazil 0
Variable cost of production: heli heli
US: $15M $20B/$100M = 200 $5B/$100M = 50
Plant in France 0
Brazil: $20M heli heli
France: $25M
Additional cost:
If helicopters are shipped into the US, then the US Govt. requires them
to be certified; the certification process is $15M per chopper.

332
Case #37: Apache Helicopter (6/7)
Sample Approach: Costs Sample Approach: Profit
Candidates should layout the costs per plant location remembering the $15M A great candidate will pause and explain why the costs are so different
for importing to the US: between the various locations. They may give some hypotheses around why
certain differences, such as production costs, may be even more of an issue
Note: A strong candidate will recognize that the revenue from France is lower with exchange rate volatility, etc.
than Brazil and that the initial setup costs as well as variable costs in France
are higher than Brazil. Therefore, they should rule France out and not need to At this point a candidate should be fully pushing to calculate the total profit
perform the calculation. expected per location.

Plant location United States Brazil France Plant location United States Brazil France

Total Revenue (over

Initial setup $500M $2B $3B $20B $20+$7.5B = $27.5B $20B+$5B = $25B
5 years)

Total Cost (over 5

Annual Fixed Cost $100M*5 = $500M $100M*5 = $500M $100M*5 = $500M $4B $11B $12.75B
years)

$20M*(200+75) = $25M*(200+50) = $
Variable Cost $15M*200 = $3B Profit (Over 5 years) $16B $16.5B $12.25B
$5.5B 6.25B

Import Cost $0 $15M * 200 = $3B $15M * 200 = $3B At this point, a good candidate should recommend which plant the contractor
should select.
Total Costs (Over 5
$4B $11B $12.75B
years) A great candidate will directly jump into a brainstorm of the risks between
selecting one plant over the other.

333
Case #37: Apache Helicopter (7/7)
Brainstorm #2 Recommendation
Given that there is only a 3% difference in profit, what are some factors that Once the cost-benefit analysis is complete, ask for a recommendation:
would cause you to choose either the US or Brazil? “The CEO is about to walk into the room and has asked us for a
Candidates should pick up that this is a risk brainstorm. The best way to do recommendation. What would you tell them?”
this would be to list risk factors down the left hand side of a table and Note: This is meant to go either way based on candidate’s last brainstorm;
compare the two options: sample is for US.

A potential response could include:

Risk Plant in US Plant in Brazil Advantage
You should open a new plant in the US
Political Negative view of US defense Instability, issues with
US
It is slightly less profitable than opening in Brazil, however, your existing
contractors president, Reselling operations and stability in the US offset the potential risk of opening up in
Currency Another recession Cheaper to pay labor
US
Brazil
Volatility in currency/5 years Risks
Labor Unionized labor, skilled Cheaper labor, unskilled Brazil Change in administration causing decreased demand
Missing out on opportunity to enter Brazil
Cost of quality Expensive to receive initial Expensive to have proper Next Steps
US
material material QA/QC
We should look into locking in a contract with the existing administration
Assumptions New administration in 5 years More likely to pull back from to ensure purchase
(demand, etc.) New opp. in Brazil purchase
(commercial heli)
US We should see if Brazil would purchase at a price lower that $100M.
Additionally, we should do an analysis to see if we can enter in a
commercial helicopter capacity.

Evaluation
This case tests a candidate’s ability to weigh different options and understand the potential demand for the client’s product. Creativity and the ability to
drive the case in the right direction should be rewarded.
It is important that the candidate refer back to the original case questions and allow their framework to drive the analyses.
A good candidate will anticipate the risks and do a cost-benefit exercise. By doing so, they should select one option and make a clear and succinct
recommendation based on what they find.

334
 Quant Level – MEDIUM

Case #38: White Boards (1/5) Case Type Industry Client Type

Sourcing /
Durable Goods Manufacturer
BAIN & COMPANY – Round 1 – Candidate Driven Outsourcing

Fit Questions Interviewer Guidance

1. Tell me about a time when you utilized effective This is a cost / benefit analysis case. Candidate should try to compare the advantages and
communication to resolve an issue. disadvantages of in-house trucking services with that of outsourced trucking services. If asked, it
2. What will be the major challenge you face as a does not matter whether the company’s retail outlets are their own or franchises, and the
consultant and how will you mitigate it? logistics of how the trucking industry works is not important.

Fit Evaluation
Overall Fit Performance
S1 O1 A1 R1
2 2 2 2

Case Prompt Case Development

Our client is a manufacturer of white boards. The client ships the boards from its factories to its distribution center 1. Framework
and then from the distribution center to all of its retail locations. To meet their shipping needs, the client presently 2. Discussion / Q&A
uses in-house trucking services. 3. Cost-benefit analysis and
additional brainstorming
They have approached Bain & Company asking for advice as to whether they should look to outsource their trucking 4. Recommendation
services instead.
Case Evaluation
Structure and Framework

Analytical and Problem Solving Ability

Communication and Positive Attitude

Synthesis and Recommendation

335
Case #38: White Boards (2/5)
Framework Interviewer Guidance
In-house vs. outsourced scenarios: profitability and non-monetary Push the candidate to think about costs (there should be no assumed
considerations. difference in revenue). A major cost of transport in this case is the damage
to goods during transit.
Once the candidate gets that this is a major cost, ask why this would
need to be included in the comparison. After all, if transportation
damages occur in both cases, it does not need to be included for
comparison.
The candidate should realize that, when outsourced, the external
contractors will not be as careful while loading and unloading thus
changing the percentage of the whiteboards that get damaged.

Once the candidate has started thinking about costs, share Exhibit 1 on the
next page with current costs, and provide the following information out-
loud:
The transit damage is 15% of the load when in-house trucking
Risks of Outsourcing services are used.
Availability of vendors (geography, volume, etc.) For outsourcing trucking, the transit damage is 25% of the load.
Quality control, loss of internal distribution practices Chart details:
Costs of product damage This shows total costs, not per pound costs.
If the candidate does not recognize that the daily volume
Working hypothesis: The company should outsource their trucking. I would considered should be 100lbs. (50lbs. to the distribution center and
like to test this by comparing the costs associated with in-house vs. 50lbs. to retailer), the interviewer should clarify this.
outsourced trucking. Do we have any data on this? The candidate should initiate using the information you’ve given
them to calculate the cost difference between in-house trucking
and outsourcing (see p. 4 for calculation examples).

336
Case #38: White Boards (3/5)
Exhibit #1
The company ships 50 lbs. of white boards daily to the distribution center, and the distribution center ships the same amount to the retail stores every day. If
outsourced, the vendor charges $8.50/lb., irrespective of distance.

Current Total Costs Per

Day

$400 $350
$350
$300 $260 $240
$250
$200
$150
$100
$50
$0
Maintenance Fuel Costs Salaries of employees
costs of trucks

337
Case #38: White Boards (4/5)
Calculations Interviewer Guidance
In-house Costs (Current Scenario): The candidate should use Exhibit 1 to perform a cost-benefit analysis by
calculating the transportation cost per lb. of saleable white board per day
Costs per day under both sourcing alternatives.
Maintenance ($260) + Fuel ($350) + Salaries ($240) = $850/day
Loss in damages Cost Comparison:
50 lbs. transported daily, round trip = 100 lbs. In-house: $10.00
Outsource: $11.33
15% damage: -15 lbs.
($1.33) savings/lb./day (Costs more to outsource than transport in-house.)
Number of saleable white boards: 85
Transportation cost per lb. of saleable white board = 850/85 If candidate calculates daily savings quickly, push them to calculate what
= $10/lb./day this would be for total volume per day, year, etc.
$1.33 savings x 100 lb./day = $133 savings/day
Outsourced Costs: $133 savings/day x 365 days per year = ~$140 x ~350 days
Costs per day = (100 x 350) + (40 x 350) = ($35,000) + ($14,000) = $49,000
$8.50/lb. x 100 lbs. = $850/day (exact answer is $48,545)
Loss in damages
50 lbs. transported daily, round trip = 100 lbs. Brainstorm:
25% damage: -25 lbs. Are there any non-monetary benefits to outsourcing our client should
consider?
Number of saleable white boards: 75
Transportation cost per lb. of saleable white board = 850/75 Candidate potential responses may include:
= $11.33/lb./day Expanded geographic reach / ability to enter new markets.
Potential increase in daily volume capacity (if internal manufacturing
can support it).
Better company focus on manufacturing vs. distribution may lead to
higher manufacturing efficiency.

338
Case #38: White Boards (5/5)
Recommendations
Brainstorm: Optional
The company should keep trucking services in-house because: After performing the calculation, ask the candidate for recommendations and solutions to
help reduce loss of saleable boards due to damage incurred during transit.
It costs an additional $1.33/lb./day to outsource (~$49K annually)
If asked, the boards come in 3 sizes small, medium, and large. The small boards are
Outside of delivery costs, in-house delivery leads to fewer damages and rarely damaged during transit while rate of damage is highest for large boards, which are
more boards to profit from overall. bulky.
Company can invest in R&D on damage reduction and provide Potential responses:
Internal
additional incentives / training to employees to reduce in-house
Invest in R&D for damage reduction practices (examples: better packaging, better
damages during transit (additional brainstorm information can be used loading practices, making white boards more modular so they can be transported in
here) smaller parts that are less likely to be damaged).
Incentivize employees to reduce damages.
Provide additional training to delivery employees.

External
Review contract terms with outsourcing provider to reduce our client’s liability costs
for damages.
Conduct secondary research to select outsourcing delivery service based on damage
reputation / history / guarantees.

Risks and Next Steps

Risks
Cost of internal changes to reduce damages may outweigh benefit of reduced transit
damage
Long-term dual focus on manufacturing and shipping may reduce growth / efficiency

Next Steps
The company can analyze costs associated with reducing damages during internal
transit by the following methods and select the best option(s) to pursue:
Making white boards modular and transport them in smaller parts to be
reassembled
Using better packaging and cushioning to reduce damage during transportation
Negotiating with outsourcing firm for them to bear losses during transit
Create long-term plan for growth and determine necessary implementation targets to
achieve goals while maintaining efficiency

339
 Quant Level - MEDIUM

Case #39: Telco Talks (1/5) Case Type Industry Client Type

Mergers &
Telecommunications Telecom Company
ACCENTURE – Round 1 – Interviewee Driven Acquisitions

Fit Questions Interviewer Guidance

1. What do you want me to know about you? This case focuses on a candidates ability to determine the marginal increase in profitability
2. Describe your dream project at X Firm. based on purchasing assets of another company. Additionally, it posses the question of
whether or not entering on a national level is worthwhile, or if they should continue to
stay in their market where they have been very profitable.

Fit Evaluation
Overall Fit Performance
S1 O1 A1 R1
2 2 2 2

Case Prompt Case Development

Our client is a large telecom company that operates in the Midwestern region. They focus on providing 3 primary 1. Data sheet discussion
services: phone, TV, and internet. They have already taken several cost cutting initiatives, and now are currently 2. Questions 1-4
exploring new growth opportunities. They’ve been approached by another telecom company WIT Co to purchase 3. Brainstorming
WIT Co’s assets and customer base, which would transform our client from a regional player to a national player. 4. Recommendation
Our client therefore has asked us whether or not they should proceed with purchasing WIT Co’s assets.

Case Evaluation
Structure and Framework

Analytical and Problem Solving Ability

Communication and Positive Attitude

Synthesis and Recommendation

340
Case #39: Telco Talks (2/5)
Framework Additional Information
Working hypothesis: I believe that the client should purchase WIT Co’s assets The candidate should write out a complete framework. If asked, the
given the following considerations. following information can be provided before the candidate structures their
thoughts.
WIT Co is healthy
Profitability Company
Revenue and Costs Goal is to grow while maintaining margins on customer basis.
Size, growth Background: assets are concentrated in states CA, NY, FL.
Access to more national customer base
Customers
Market position
New capabilities Are both residential and business.
Better tech, faster speeds, reliability (phone, TV, and internet)
After candidate completes the discussion of their framework, the candidate
Purchase is financially positive
should drive toward inquiring about the financial position of the client and
Cost of acquisition
acquisition target. If not, make sure to provide to the information below to
Cost-benefit analysis for client
the candidate before moving on to Question 1.
ROI / BE / NPV

Combination is better than alone Current Client

Cost synergies Revenue of $8.5B
Scale
Combined customer services/marketing Costs of $7.5B
5M customers
Risks
Government anti-trust suits WIT Co (acquisition target)
Cultural fit Revenue of $5B
Geographical expansion: additional infrastructure needs
Costs of $4.55B
3.6M customers

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Case #39: Telco Talks (3/5)
Question 1 Question 1: Continued
What is the profit and who is the customer for the current and combined The candidate should recognize that the result of purchasing the assets would
companies? Compare the two and determine whether or not to buy the yield a lower profitability per customer than without the assets. A great
assets. candidate would jump into a brainstorm of how to lower costs after
purchasing. However, steer candidate with the following prompt:
If the candidate struggles, guide them to calculate the profitability on a per
Let’s say that if Telco purchases WIT Co’s assets, they believe that they can
customer base. Although not tested in this case, telecom cares highly about
save $500M in costs due to a leaner labor force and to utilizing certain
churn.
contracts that they currently have. Would the acquisition still be worthwhile?

The candidate should recalculate but only using the combination

Combined with Synergies

Revenue $13.5B
Costs $12.05B -$0.5B = $11.55B
Profit $1.95B

Customers 8.6M
Profit/Cust $226.74/cust

The candidate should recognize that the new profit is higher than the
previous combined calculation and that the acquisition is worthwhile.

342
Case #39: Telco Talks (4/5)
Question 2 Brainstorm
The candidate should drive to the acquisition price of the assets. If they do What are some benefits and risks that you would want to consider when
not, give them the following prompt: giving a final recommendation?
The following is just a sample framework of this brainstorm. There are many
What is the maximum amount that they should pay for WIT Co’s assets? categories they can consider and several ideas from the candidate’s original
case framework can be used here to support their response.
The candidate should recognize that they need to use a perpetuity
calculation to determine the benefit of the acquisition for the client. In addition, the candidate should explain why each bullet is important when
Therefore, the maximum the client should pay is the perpetuity of the discussing their brainstorm framework.
additional profits from WIT Co and the synergies they receive.

Calculation
Total additional profit from acquisition is:
$450M (WIT Co) + $500M (synergies) = $950M/year

Guidance
▪ Assume profitability is constant in perpetuity
▪ Assume a 12% discount rate
▪ Assume 2% growth into the future (mature market)
▪ Candidate should realize discount = 10% (12-2)

Perpetuity = $950M / 0.1 = $9.5B

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Case #39: Telco Talks (5/5)
Risks and Next Steps
Recommendations
Once the risk benefit brainstorm is complete, ask for a recommendation: Risks
“The CEO is about to walk into the room and has asked us for a We will not maintain the existing customer base which gives us the
recommendation. What would you tell them?” additional profit
Attrition could result from differences in service availability / quality
A potential response could be: Market will not maintain its current pace as we considered a specific
The client should acquire WIT Co’s assts for up to . B growth and discount rate
We can capture $950M in additional profit a year Synergies don’t decrease costs as expected
This is due to an increase in profits of approximately $26/customer Next Steps
We should do a customer survey to see what customer retention would be
like
Develop post-merger integration plan
Perform a market analysis to ensure that we can expect a growth rate of
2% and a discount rate of 12% (overall discount rate of 10%)
Perform detailed due diligence to confirm estimates / secure synergy cost
reduction
Evaluation

This case tests a candidate’s ability to determine the benefits and risks of
an acquisition, including a determination of whether an entry into a larger
market would actually be beneficial for the company.
A good candidate will anticipate the risks of the assumptions made.
Specifically, the candidate will consider the risks associated with the
assumption of a consistent customer base, which yields the additional
profit anticipated, as well as the assumption around the discount rate,
which, when altered, drastically changes the price the client is willing to
pay for the acquisition.

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 Quant Level - LIGHT

Case #40: Yarmouth Yachts (1/7) Case Type Industry Client Type

Luxury Yacht
Legal Analysis Luxury Retail
CORNERSTONE – Round 1 or 2 – Candidate Led Manufacturer

Fit Questions Interviewer Guidance

1. What are your long-term goals? This case is provided by Cornerstone Research, an economic and financial consulting firm
2. Tell me about a time you made a significant impact on providing analysis /expert testimony in commercial litigation and regulatory proceedings. Thus,
a team. the case has a legal component which may not be seen in other types of case interviews. Also, a
traditional framework is not necessary for this case as it develops through a series of questions
and answers.

Fit Evaluation
Overall Fit Performance
S1 O1 A1 R1
2 2 2 2

Case Prompt Case Development

Yarmouth Yachts is a publicly-traded luxury boat builder ($2M avg. selling price). The company experienced rapid earnings growth and share price 1. Case Prompt
appreciation during and . See Exhibit for an overview of Yarmouth’s sales process. (Provide Exhibit 1 after prompt.)
2. Evaluating Stock Price Drop
Over the course of 2006, management revised its FY06 earnings guidance upwards and maintained guidance of 20% earnings growth for FY07. On 3. Evaluating Net Income
December 12, 2007, Yarmouth released record FY06 results that surpassed earlier guidance (89% net income growth) and revised its FY07 4. Calculating Damages
projection to 2 11% growth. Its stock closed at -22% for the day. (Provide Exhibit 2 after prompt.) 5. Conclusion
Following the stock drop, a class action suit was filed alleging that executives inflated Yarmouth’s stock price during the time period from January 9,
2006 to December 12, 2007 (1/9/06 1/12/07) by withholding information about a decline in showroom visits. This was the only allegedly concealed Case Evaluation
information. The plaintiff’s allegations were the following: Structure and Framework
1. Misleading investors about growth prospects. Company revised FY07 estimates down from 20%.
2. Withholding crucial information. Plaintiffs allege executives had material inside information about a decline in customer showroom visits that Analytical and Problem Solving Ability
would cause a decline in FY07 income. Yarmouth discloses the value of new contracts on a quarterly basis, but not showroom visits.
Cornerstone has been retained by Yarmouth’s counsel to develop economic responses to the allegations. What types of questions would we want to
ask to assess the reasonableness of the plaintiff’s claims? Communication and Positive Attitude
(If the candidate asks for specific financial information, you should state that this is not necessary to complete the case. Details about
Yarmouth’s strategy and operations are also outside the scope of the case.
Synthesis and Recommendation

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Case #40: Yarmouth Yachts (2/7)
Exhibit 1 Exhibit 2

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Case #40: Yarmouth Yachts (3/7)
Sample Response
The following includes some of the areas the candidate may want to investigate. If the candidate does not bring up this areas on their own, ask the questions
to the candidate. When the candidate provides a response, ask for specific examples / factors.

1) Did the disclosure cause the stock price to drop? Are there alternative explanations?
Examples: Market, industry, or other firm-specific factors

2) If not fraud, what other reasons could justify the 2007 guidance revision?
Examples: Economic slowdown, change in consumer preferences for boats, increased competition, etc.

3) Was the information known to insiders [i.e. the decline in customer showroom visits] important for the market to know? Do the allegations matter?
It is important for the market to know about such information only known to insiders as this is potentially an indicator of overall company growth. It
looks like factors, such as the decline in customer showroom visits, might be important information that is hidden as evidenced by the decline in stock
price in 2006. But, more analyses should be done to conclude this.
Based on Exhibit 1, we do not have any numbers which indicate that every customer who visits the showroom signs a contract or even that a large
number that visits signs a contract. It would be great to have information on the number of people that visit and on the number of conversions.
Additionally, it would be a great next step to analyze the direct impact of customer visits on net income.
The allegations matter as it is extremely important that accurate financial information regarding the growth prospects of a company be reported to
investors. However, whether the allegations are material is a different point that requires further analysis.

Note: Candidates may not ask the above questions initially. After some probing, the interviewer may provide them with the question and / or relevant
information.

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Case #40: Yarmouth Yachts (4/7)
Question 1 Question 2
Ask the candidate the following: After discussing the stock drop, ask the candidate this follow up question:
What analysis could we do to evaluate other possible causes for the stock What analysis could we do to evaluate the claim that the Executives had
drop? What data would we need? inside information and allegedly knew the company’s net income would
eventually decrease?
The candidate should ask if there are market or industry variables that can
explain the stock drop. This analysis requires returns data for Yarmouth, a This question addresses the relationship between showroom visits and net
broad market index such as the NYSE, and an index of comparable income. Remind the candidate that Yarmouth discloses contracts signed on
companies. Refer the candidate back to the price chart in Exhibit 2. a quarterly basis, but not showroom visits.

The take-away is that market and industry factors do not appear to fully The correct response is to build regression models to analyze the
explain the stock price drop because the indices are flat or have much relationship between net income, contracts, and visits.
smaller relative declines than Yarmouth on the disclosure day.
After getting this response, ask the candidate to interpret the regression
Explain that the burden of proof is on the plaintiffs to rule out other output in Exhibit 3 (this step is optional; show candidate Exhibit 3 if
possible causes for the share price drop. Plaintiff’s argument does not proceeding with analysis).
control for market or industry factors. The conclusions the candidate should draw is that contracts are
sufficient predictors of net income and that disclosure of showroom
visits is not material. After controlling for lagged showroom visits and
contract value (Exhibit 3, Regression 3), contract value is the only
statistically significant predictor of net income.

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Case #40: Yarmouth Yachts (5/7)
Exhibit 3: Optional

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Case #40: Yarmouth Yachts (6/7)
Question 3 Sample Calculation
Regardless of any discussion of the regression analysis in Exhibit 3, ensure Provide candidates with the below data and ask them
that the candidate now knows that, in actuality, the showroom visits do not to calculate alternative damages:
matter and that it is only the contract value that predicts net income. Actual return per share (price drop per share): $8.00
Modeled return (price drop per share based on market factors): $4.00
Ask the candidate the following question: Damaged shares shares that don’t include people in point : MM
The plaintiffs have argued that each investor owning shares on December 12,
2007 should be repaid for the full price drop on the corrective disclosure day. Calculations:
Based on an $8 price drop and 155MM shares outstanding, please calculate
the potential damages for Yarmouth.

$8 * 155MM = $1.2B

Then ask:
Is this a reasonable amount? How can we reduce the potential damages for
Yarmouth?
Interviewer Guidance
There are two approaches to address:
1. Control for other factors in returns. Build a model to estimate what the
return would have been had the corrective disclosure not been made (the
“but-for price . A predicted decline helps explain can partially offset
the price drop on the disclosure day.
2. Exclude shareholders who were not affected by the alleged price
inflation. This group includes (i) anyone who bought and sold before the
alleged disclosure date, (ii) shares held by Yarmouth Executives, and (iii)
shares held throughout the entire class period.

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Case #40: Yarmouth Yachts (7/7)
Interviewer Guidance Recommendation
End by asking the candidate to summarize the findings of the case. Key Findings
Plaintiff calculations are overly broad and fail to account for the impact of
market and industry factors on returns and shareholders who are not
damaged.
Ex. The overall potential damages are $100MM versus $1.2B suggested
by the plaintiffs. Shares bought and sold before the disclosure date were
not damaged.

Contracts are a sufficient predictor of net income and showroom visit data
were not material as was alleged by plaintiffs. (In this case, regression
analysis was used to test the materiality of showroom visits.)

For damages calculations, a market model was used to partially offset the
stock price drop on the disclosure day. The purpose of this is to estimate
the share price return “but-for the corrective disclosure.
Evaluation
Risks
The candidate should be able to clearly and succinctly discuss the findings of
Financial and legal risk: while lower than $1.2 billion, $100MM in
the case. They should also discuss the results of the analyses and explain how
charges can be significant for Yarmouth
the analyses impact the case.
Undetermined relationship between % of showroom visits and contract
conversion
Plaintiffs might debate the actual number of damaged shares

Next Steps
Analyze company financials to determine if they can sustain such a
payout in damages
Analyze % of showroom visits that lead to contracts; identify trends for
these data
Find comparable cases where a company was sued for similar stock
fraud to determine appropriate number of damaged shares

351
 Quant Level - LIGHT

Case #41: Sueno Mattress (1/5) Case Type Industry Client Type

Mattress
Profitability Consumer Products
KPMG– Round 1 or 2 – Candidate Led Manufacturer

Fit Questions Interviewer Guidance

1. Describe your ideal team working environment? This case is a competitive strategy case in which an established player is losing profits
2. Tell me about a time when you had to make a decision due to customer purchasing habits (i.e. moving to lower priced, direct-to-consumer products).
without all of the information you wanted or needed. While the client has maintained revenue and volume above market growth, their units are now
being sold at outlet stores at a discount resulting in smaller profit margins.
Through the course of the case we will seek to get the candidate’s thoughts on:
The overall market and competitive dynamics at play
Potential reasons for client challenges
Pros and cons of different channel distribution strategies
Fit Evaluation Impact of shifting consumer trends on a company brand
Overall Fit Performance Suggested path forward to address these challenges
S1 O1 A1 R1 Opportunities and risks associated with suggested path
2 2 2 2
Immediate next steps for the client
Case Prompt Case Development
Sueno Mattress is a top 5 US mattress manufacturing company. 1. Case Prompt
2. Evaluating Stock Price Drop
The company has seen steady growth in recent years, but has missed profit targets the past three quarters and the 3. Evaluating Net Income
stock price is slipping. Thomas Scott, the CEO, has contacted KPMG Strategy for advice on how to respond to the 4. Calculating Damages
company’s current situation.
5. Conclusion

Case Evaluation
Structure and Framework

Analytical and Problem Solving Ability

Communication and Positive Attitude

Synthesis and Recommendation

352
Case #41: Sueno Mattress (2/5)
Information to be disclosed Data only if requested
Sueno Mattress has a varied product line, but can mostly be thought of as Sueno distributes its products through three major channels:
offering three main SKUs: Good, Better, Best. Furniture stores (i.e. Ashley Furniture, Rooms-to-Go)
Mattress stores (i.e. Mattress Firm)
Global market = $30B growing at a CAGR of 7% 300 client owned Luxury stores across North America (i.e. Sueno Branded Stores)
Channel sales mix is in-line with other major players
Industry Value Chain: Super-luxury brands distribute their products via
their own stores, while most other players rely on furniture stores and Average Sueno Mattress Sales Price
mattress stores to reach consumers. Furniture stores: $1,000
Mattress Stores: $850
Customer Trends: In the past five years, a number of new players have Sueno Branded Stores: $1,150
entered the market with an online direct-to-consumer model, offering
lower prices to consumers and driving down customer willingness to pay Global Market Segmentation
full prices across the industry Asian market: 12% CAGR
US market: 5% CAGR
RoW markets: 8% CAGR

2016 Annual Sales Data:

Mattresses Sold: 3M
Revenues: $3B

2017 Annual Sales Data:

Mattresses Sold: 3.15M
Revenues: $3.09B

Pricing: Sueno has not dramatically changed its own store pricing

Product Mix: Has not dramatically changed over last 5 years

COGS/Ops. Costs: Sueno has not seen any significant increase in product
costs

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Case #41: Sueno Mattress (3/5)
Sample Response
Frame problem, approach and hypotheses:
The candidate should frame the client problem and begin to formulate a hypothesis to prove/disprove and drive the analysis.
There are multiple possible explanations behind declining profitability including, but not limited to decreasing revenues, decreasing market
share, decrease in price, increasing costs, etc.
The candidate should identify what analysis needs to be done to identify the underlying cause of the problem and determine a strategic
approach to advise our client such as price, volume, cost analysis; competitive landscape; customer trends/need, etc.

Question 1
Ask the candidate the following:
What analysis could we do to evaluate the industry and potential cause of profitability decline?

Interviewer should steer the candidate to look into their identified potential causes of profitability decline. Refer below to various data sets to support their
analysis.
The order and depth of discussion on the following bucketed topics will likely vary from candidate to candidate.

A good candidate might identify:

The US is losing market share to other regions
The loss is due to a slower growth compared to other regions
Sueno (our client) is focusing on the slowest growth area

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Case #41: Sueno Mattress (4/5)
Question 2 Question 3
Ask the candidate the following: After discussing industry trends and client sales/financials, ask the candidate
What analysis could we do to evaluate the client sales & financials? to analyze the Channel Trend Data.

The interviewer should steer the candidate to look into segmenting the market data by
If candidate requests historical financial data for Sueno provide the 2016/17 channel segment and region. Refer below to various data sets to support their analysis.
sales numbers provided in Databank. The interviewer should prompt the Note: Based on how the candidate frames the issue, either provide market segmentation
candidate to calculate YoY volume & revenue growth % (to determine if data (as shown in graphs) or share the 2012 -2017 change (i.e. -10% change for US
Furniture stores).
performance is above, below or behind competitors/ market). The
interviewer should have the candidate walk through the logic and
assumptions. There are multiple ways to estimate the value, but a sample
calculation is provided below.
2016 to 2017 YoY growth:
Units Sold: (3.15M 3M)/3M = 5%*
Revenue: ($3.09B - $3.0B)/$3.0B = 3%*
Candidate should be able to identify Sueno’s volume growth is in line with US
market, but lags behind China and Rest of World. Also, the gap between
revenue and volume growth should be noted.

Candidate will likely request pricing information, so the interviewer should

prompt the candidate to calculate estimate the value per unit. There are
multiple ways to, but a sample calculation is provided below: A good candidate might identify:
Average revenue per sale per year: The emergence of direct-to-consumer as a new sales channel
2016 Avg. Price/unit: $3B/3M = $1,000 The Luxury and Furniture Store segments are shrinking
2017 Avg. Price/unit: $3.09B/3.15M = $980+ The Mattress stores segment is taking more share of sales
It may not be necessary for candidate to accurately complete the calculation A greater portion of 2017 sales are coming from a channel with lower sales prices
for 2017 average sales price, but they should be able to set up the equation The Chinese market, although growing faster, is only ~26% of the US market
and note that the average price has obviously fallen below $1000/unit.
The interviewer should push the candidate to outline thoughts on the impact of identified
trends AND how the profitability decline may be mitigated based on the information
If prompted, inform candidate that other areas of potential analysis (e.g. provided.
variable costs, fixed costs, overhead) appear to be unchanged and prices
Push the candidate to develop hypotheses and quantitatively determine what the largest
remain unchanged. value at stake opportunity is.

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Case #41: Sueno Mattress (5/5)
Interviewer Guidance Recommendation
Select recommendations
Case Wrap-up: After the candidate has exhausted available data and Introduce new product to meet demands of growing “direct-to-
completed the analysis OR the interview is running out of time, prompt the consumer market
candidate to provide a summary of the findings for the client and provide a Reposition brand to meet changing customer needs i.e. target “luxury
recommendation to increase profitability. customers
Expand geographically to take advantage of global market growth in
higher priced sales
Analyze same store sales (owned stores) to determine if low performing
stores should be closed
Limit availability of product to mattress retailers (depends on brand
strength)

Risks
Introduce new product: Cannibalism to higher margin products? What
are key criteria for success? Impact on brand reputation? Can costs be
Evaluation
cut to maintain margin?
Expanding geographically: Pulling out of US, brand impact, investment
The candidate should be able to clearly and succinctly discuss the findings of cost? How would we do it? Market knowledge?
the case. They should also discuss the results of the analyses and explain how
Repositioning brand: Can our cost structure support this? Will more low
the analyses impact the case.
price sales offset lost high price sales in own stores/furniture stores?
Limit availability of product to mattress outlets: Is our brand strong
enough to drive consumers towards owned stores and dept. stores to
find our product?
Limit discount % allowed by retailers: Is our brand strong enough to
maintain volume at higher prices? Price elasticity of consumers?

356
 Quant Level - MEDIUM

Case #42: Cruise Line Acquisition (1/7) Case Type Industry Client Type

Profitability Travel & Tourism Cruise Line

EYP – Round 1 – Candidate Driven

Fit Questions Interviewer Guidance

1. Tell me about a conflict that you have had in the The primary objective is to determine if it is feasible to increase profitability of the acquisition
workplace. target. The goal is to move from 10% to 40% EBITDA. Do not disclose target unless asked.
2. Tell me about your most rewarding accomplishment.
This is a straightforward profitability case that is good practice for the candidate to drive the
case forward. Not much guidance should be necessary.

Fit Evaluation
Overall Fit Performance
S1 O1 A1 R1
2 2 2 2

Case Prompt Case Development

Our client is FunCruiseLines, a major cruise line headquartered in the United States. They are currently considering 1. Framework
acquiring a new, luxury cruise line, FSC (Fancy Small Cruises). Before doing so, they would like to determine if there is 2. Profitability analysis
room to increase profitability of FSC. 3. Brainstorm
4. Final recommendation
They have asked us to come to a meeting with their CFO and tell them if we think this can be done.

How should we structure this case?

Case Evaluation
Structure and Framework

Analytical and Problem Solving Ability

Communication and Positive Attitude

Synthesis and Recommendation

357
Case #42: Cruise Line Acquisition (2/7)
Framework Interviewer Guidance
Working hypothesis: FunCruiseLines will be able to increase profitability of Candidates will take a variety of approaches to structuring an approach to this
FSC. question. The primary things to look for are:

Will FunCruiseLines be able to increase profits? Did the candidate state a hypothesis?
- Expected Revenues per passenger per day The candidate should express the core idea that they would like to test through
- Ticket Sales their analysis. They should clearly demonstrate how the questions they’re asking
are directed at answering the specific question of whether FunCruiseLines should
- Excursions
acquire FSC.
- Casino It’s less important for the hypothesis to be backed up with evidence, since it’s so
- Beverage early in the case (though strong candidates will draw on their own knowledge and
- Expected costs intuitions to develop preliminary insights about the potential for this acquisition).
- Fixed corporate salaries, office rent, shipboard salaries, fuel, port docking fees
- Variable food & beverage, excursion costs Is profitability the primary consideration?
The prompt is very clear that profitability is the deciding factor for management.
Will efforts to increase profits be successful? It’s OK for candidates to discuss other considerations, but their primary focus
- Primary competitors should be on profitability.
- What is their profitability?
- Will they respond?
Is the framework case-specific?
Excellent frameworks will explore specific aspects of the Cruise Line market and
- Will efforts to reduce costs make us less competitive? overall economic environment (e.g., COVID-19), rather than just generic ideas
- Execution about profitability.
- What timeframe is needed to execute?
- Will any capital investments be needed to reduce operating costs?

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Case #42: Cruise Line Acquisition (3/7)
Revenue & Cost information Continued
Revenues: The candidate should calculate totals for FSC, FunCruiseLines, and
This case will be focused on costs, not revenues. While a great candidate will competition, as well as new costs to FSC after alignment.
be able to list out expected revenue categories, they should be educated that
FSC is an all-inclusive line, with revenues of $1,000 per APCD (Available Costs:
Passenger Cruise Day - this is a “unit revenue for the Cruise Line industry . FSC (pre): $900/APCD
Gaming (casino) revenues can be ignored. FSC (post): $650/APCD
FunCruiseLines: $200/APCD
Costs: Competitor Avg: $660/APCD
Provide the candidate with exhibits 1 + 2 as requested. The candidate should
be able to make assumptions on which cost categories should align with Itemized costs:
competitors (e.g., food) and which can align to the parent company. These Corporate salaries: $10/APCD align to parent
are listed below. Provide guidance as needed, but ensure candidate explains Office rent: $5/APCD align to parent
their rationale for their choices. Fuel cost: $45/APCD apply 10% discount to align to parent $/bbl
Shipboard salaries: $220/APCD align to competition
Cost alignment: Port docking fees: $50/APCD align to competition
- Align to parent company Food & beverage: $100/APCD align to competition
- Office rent Excursions: $220/APCD align to competition
- Fuel cost / barrel Total: $650/APCD
- Candidate should recognize this will not align on an APCD basis due to
fewer passengers on board, however candidate should recognize the The candidate should note the stark difference between FSC and the parent
10% cost reduction and apply accordingly company, however, this is not an issue as the parent company is a very
- Shipboard salaries different business (>2,000 passengers / ship).
- Corporate salaries
The candidate should also note that this does not meet the margin
- Align to competitors
requirements the parent company was interested in. The candidate can then
- Port docking fees align to competitors because destinations are more
be asked to brainstorm to come up with the idea of increasing the number of
luxurious than FunCruseLines
passengers / ship. At this point, present the candidate with exhibit 3.
- Food & beverage
- Excursions

359
Case #42: Cruise Line Acquisition (4/7)
Passenger density Recommendation
Once presented with exhibit 3, the candidate should recognize that only fixed Candidate should deliver the recommendation that the client should move
costs will be adjusted, and that costs will be reduced 20%. forward with the acquisition as they can reach their EBITDA target of 40%+

New costs:
Corporate salaries: $8/APCD
Office rent: $4/APCD
Fuel cost: $36/APCD
Shipboard salaries: $176/APCD
Port docking fees: $40/APCD
Food & beverage: $100/APCD
Excursions: $220/APCD
Total: $584/APCD

Risks & Next Steps

Candidate should recognize that reduced costs may reduce the customer
experience, follow up with customer survey
Candidate should recognize risks with combining corporate offices to
ensure that the parent company can market & meet needs of luxury
customers, follow up with staff survey and / or training

360
Case #42: Cruise Line Acquisition (5/7)
Exhibit #1: Costs per APCD

361
Case #42: Cruise Line Acquisition (6/7)
Exhibit #2: Fuel costs / bbl

$40

$36

FunCruiseLine
s
FSC

Cost / bbl

362
Case #42: Cruise Line Acquisition (7/7)
Exhibit #3: Survey results

1,000

800

FSC
(Current)
Acceptable to
Customers
Passengers / ship

363
 Quant Level - MEDIUM

Case #43: Shoe Co. (1/7) Case Type Industry Client Type

Consumer Product
Market Entry Retailer
BAIN– unknown – Candidate Driven Goods

Fit Questions Interviewer Guidance

1. Tell me about a situation where you dealt with
ambiguity? This is a straightforward market entry case that is good practice for the candidate to drive the
2. Tell me about a time where you were required to case forward. Not much guidance should be necessary.
motivate a diverse team?
Volume of sales can be understood as the average number of transactions within the store.

Fit Evaluation
Overall Fit Performance
S1 O1 A1 R1
2 2 2 2

Case Prompt Case Development

Our client, Shoe Co., is a small affordable luxury shoe retailer, branded as classic and fun. The average shoe sells at a 1. Framework
price point of $300 per pair. 2. Profitability analysis
3. Brainstorm
Unfortunately, our client is facing a recent decline in the volume of same store sales despite the growth of same store 4. Final recommendation
sales for competitors. Our client hired us to understand the root cause of the client’s same store sales decline?

Case Evaluation
Structure and Framework

Analytical and Problem Solving Ability

Communication and Positive Attitude

Synthesis and Recommendation

364
Case #43: Shoe Co. (2/7)
Framework Interviewer Guidance
Working hypothesis: Shoe Co. is likely facing a decline in sames store sales Candidates will take a variety of approaches to structuring an approach to this
due to a misalignment with customer trends given that competitor growth question. The primary things to look for are:
indicates it is not an industry wide trend.
Did the candidate state a hypothesis?
Framework should focus on drivers of same store sales including: The candidate should express the core idea that they would like to test through
their analysis. They should clearly demonstrate how the questions they’re asking
1) Market Dynamics are directed at answering the specific question of what is the driver of Shoe Co’s
decline in same store sales
a) geographic considerations
b) industry wide trends
It’s less important for the hypothesis to be backed up with evidence, since it’s so
early in the case (though strong candidates will draw on their own knowledge and
2) Customers
intuitions)
a) Customer trend information and preference
b) Where are customers falling out of the pipeline (coming to the store,
checking out?, returns?
3) Competitors Is the identification of the root cause the primary consideration?
a) Competitor price points The prompt is very clear that same store sales are declining and the client wants
b) competitor customer demographic to know the root cause.
c) Competitor product differentiation
Is the framework case-specific?
Excellent frameworks will explore specific aspects of the luxury shoe market and
overall competitive environment .

Candidate should ask for information about either the competitors or customers, if they
ask about the competitors steer them towards the customer information.

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Case #43: Shoe Co. (3/7)
Exhibit #1: Consumer Survey Results

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Case #43: Shoe Co. (4/7)
Exhibit #2: Consumer Survey Results

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Case #43: Shoe Co. (5/7)
Exhibit #3: Consumer Survey Results

368
Case #43: Shoe Co. (6/7)
Exhibits Math
Exhibit 1: The candidate should calculate totals for FSC, FunCruiseLines, and
Candidate should note that Shoe Co. has a 70% consumer awareness competition, as well as new costs to FSC after alignment.
But only a ~20% conversion rate to purchase
Design Spend Increase:
A strong candidate will ask for further information on this low conversion rate Increase in design spend as % of sales: 8% - 6.5% = 1.5%
and if this is a recent or ongoing trend? Required increase in design spend: $800*1.5% = $12M

Exhibit 2: Expected Gross Margin Lift costs:

Candidate should note that this is a persistent trend that is due to a Expected sales lift: $800*5%= $40M
decrease in volume of purchases Gross Margin: $40M *40% = 16M
Candidate should see that ~30% (75% of 40%) decreased purchases Expected Lift: $16M - $12M = $4M
for design reasons

Candidate should ask if there is more information around the product design

Exhibit 3:
Candidate should note that 40% of those familiar with Shoe Co. do not
buy because of product issue
The wrong product assortment is keeping customers away

Once candidate reaches the above conclusion, share the following

information:
- Shoe Co spends significantly less in design compared to other
competitors in the market.
- Industry benchmarks is 8% of sales, Shoe Co is currently at 6.5%
- Shoe Co has sales of $800M and Gross Margin % of 40%
- Bain Retail Expert expects that “...getting the assortment right can be
worth between 5- in sales lift for the average retailer.
Ask: what would the expected gross margin lift be with an increase in design
spend?

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Case #43: Shoe Co. (7/7)
Brainstorm Recommendation
Candidate should deliver the recommendation that Shoe Co should
Ask: what other quantitative or qualitative questions would you want to
increase their product design spend to better serve customer tastes and lift
consider if you were Shoe Co?
their gross margin by $4M.

Qualitative:
Investing in-house versus outsourcing design is this a capability that
Shoe Co should have internally?
Scale of investment given Shoe Co’s small size, will this investment
based on % of sales be big enough to be meaningful? Is there a
minimum dollar threshold above which they must invest to reap
benefits?

Quantitative:
Ramp-up costs (i.e. hiring designers, expanding facilities)
Payback period
NPV Risks & Next Steps

Candidate should recognize some risks associated with the

recommendation including that the recommendation might have a longer
timeline that client would prefer
Next steps should align with the risks or recommendation noted, such as a
launching a consumer survey to better understand their design preferences
going forward

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 Quant Level - MEDIUM

Case #44: Craft Co. (1/5) Case Type Industry Client Type

Consumer Product Retailer /

Profitability
EYP– unknown – Interviewer Driven Goods Distributor

Fit Questions Interviewer Guidance

1. Tell me about a time where you failed?
2. What is a project you worked on that you are proud of If candidate asks:
the results? Why? Craft Co’s products are typically marketed towards young adults ages -35
Craft Co. was seen as the first major player in this market, but new competitors began to
enter by the end of 2020
There is no specific ROI or objective that our client is aiming to achieve related to this
analysis, but they are most interested in short-term strategies in the next 1-3 years as
opposed to longer-term opportunities
Fit Evaluation Craft Co. is currently focused solely on the U.S. market
Overall Fit Performance
S1 O1 A1 R1
2 2 2 2

Case Prompt Case Development

Read to candidate: 1. Framework
Our client, Craft Co., is a subscription service that will send customers kits for adult crafting and DIY projects 2. Profitability analysis
(e.g., watercolor painting, woodworking) 3. Brainstorm
Customers pay a monthly fee based on the number of kits they would like, Craft Co. sends them a box with 4. Final recommendation
craft supplies
Craft Co. had grown its customer base rapidly during the COVID-19 pandemic, but has seen a dip in recent
quarters as new competitors have entered the field
Case Evaluation
Management is looking to assess the business’s current performance and identify whether it can grow
Structure and Framework
profitably and regain market share in the next ~3-5 years
Analytical and Problem Solving Ability
Our client would like our help in answering two questions (i) how has Craft Co. performed recently? and (ii) what
strategies can it implement to grow profitability and increase share?
Communication and Positive Attitude

Synthesis and Recommendation

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Case #44: Craft Co. (2/5)
Framework Brainstorm before Math
How can Craft Co. become more profitable?
Working hypothesis: Craft Co. is likely facing a decline in sames store sales
due to a misalignment with customer trends given that competitor growth Revenue growth
indicates it is not an industry wide trend. Increase revenue from existing customers
Enter new geographic markets
Framework should focus on drivers of same store sales including: Expand into new channels e.g., children s kits, cooking kits

1) Profitability Review Cost control

a) Revenue Analyze marketing mix and effectiveness to reduce spending without losing
i) Subscriber base subscribers
ii) Subscription price point
iii) Volume of sales
b) Costs
i) Fixed Costs (store front, manufacturing facilities, etc)
ii) Variable Costs (materials, shipping, etc.)
2) Market Considerations
a) Current market Share
b) Product Suite alignment with consumer trends
3) Execution Strategies

Allow the candidate to walk you through their framework, noting that we do
not have information on product opportunities, guiding them to the
profitability exercise

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Case #44: Craft Co. (3/5)
Exhibit #1: Consumer Survey Results

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Case #44: Craft Co. (4/5)
Exhibit #2: Consumer Survey Results

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Case #44: Craft Co. (5/5)
Exhibit 1 Exhibit 2

Question : Based on exhibit , how would you estimate Craft Co.’s monthly Question : What do you notice about Craft Co.’s performance?
profitability in Q4 2020? Answer should include:
Answer should include: Craft Co. outperforms competitors on price and quality, but
Accurate calculation of revenue, cost, and profit underperforms on delivery and convenience
Craft Co. is operationally unprofitable, largely driven by marketing Exhibit 2 in context with profitability analysis suggests Craft Co. has
costs likely lost customers to higher-priced competitors positioned as
Individuals purchasing 1 kit per month are breaking even and do not “premium , therefore there may be opportunity to increase price to
need to be calculated to find profit restore profitability since Craft Co. is perceived as high-quality

Question 4: How might Craft Co. stabilize its subscriber decline?

Stabilization levers:
Better differentiating its product relative to new entrants
Loyalty incentives
Acquiring one of its competitor

After this brainstorming, the case is finished. A strong candidate will wrap up
the brainstorm naturally with a strong “so-what .
Question : Based on exhibit , how would you describe Craft Co.’s pattern of
subscriber growth?
Answer should include:
Subscriber levels have seen a steady decline in 2020, even though
interest in crafts likely increased due to the pandemic
Earlier growth could be due to strong investment in marketing and
lack of initial competitors and/or pandemic-related demand increase
across the market

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 Quant Level - MEDIUM

Case #45: Telecom Co. (1/8) Case Type Industry Client Type

Market Entry Telecom Telco

BAIN– unknown – Candidate Driven

Fit Questions Interviewer Guidance

1. Tell me about a time when you had to convince
someone of an opposing viewpoint This is a market entry case that requires break even analysis. The candidate may be challenged
2. Tell me about a time when you overcame adversity to seek out understanding of the industry in order to clearly articulate a solution.

Fit Evaluation
Overall Fit Performance
S1 O1 A1 R1
2 2 2 2

Case Prompt Case Development

Our client, Telecom Co., provides satellite TV services DBS nationally. Telecom Co.’s customer base is being 1. Framework
threatened by telcos and cable companies offering “triple play combo services . To combat this, Telecom Co. is 2. Brainstorm
considering deploying wireless network (WiMAX) to offer broadband internet. 3. Profitability analysis
4. Final recommendation
Should the client go into the WiMAX business?

Case Evaluation
Structure and Framework

Analytical and Problem Solving Ability

Communication and Positive Attitude

Synthesis and Recommendation

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Case #45: Telecom Co. (2/8)
Framework Interviewer Guidance
Working hypothesis: Telecom Co. should invest in WiMAX to be competitive Candidates will take a variety of approaches to structuring an approach to this
against other providers. question. The primary things to look for are:

Framework to help answer whether or not the investment is attractive: Did the candidate state a hypothesis?
The candidate should express the core idea that they would like to test through
- Costs their analysis. They should demonstrate how their hypothesis answers the core
- Capital expenditures prompt of whether or not Telecom Co. should enter the WiMAX market
It’s less important for the hypothesis to be backed up with evidence, since it’s so
- Base stations
early in the case (though strong candidates will draw on their own knowledge and
- Licenses intuitions)
- Additional equipment
- Operational expenses
- Maintenance
Is the framework case-specific?
- Leases Excellent frameworks will explore specific aspects of telco industry
- SG&A
- Sales & marketing The candidate should move forward with examining the costs next
- Revenue
- Market share
- How big is the market?
- Reasonable market share?
- Pricing
- Market price benchmark
- Price sensitivity
- Key challenges
- Buy vs.build
- Competitive moves
- Regulations

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Case #45: Telecom Co. (3/8)
Exhibit #1: Total Cost Structure

Total cost

Network cost SG&A

Customer Premise Assume

Spectrum Base Stations these costs
Equipment* are minimal
initially and
focus on
network
costs

* CPE is additional equipment placed in subscribers’ homes

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Case #45: Telecom Co. (4/8)
Exhibit #2: Historic Spectrum auction price

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Case #45: Telecom Co. (5/8)
Exhibit #3: Own or Lease base station?

Build (Own & Operate) Lease

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Case #45: Telecom Co. (6/8)
Exhibits Interviewer Guide

Exhibit 1: Cost structure Exhibit 1: Cost structure

Outline of costs associated with pursuing the opportunity Candidate should ask for detailed breakdown / data for each.

Exhibit 2: Spectrum Auction Price Exhibit 2: Spectrum Auction Price

Assume Spectrum price average is $500M and use this in final calculation Candidate should list what they see in this historic data, but ultimately identify that
they can use the average in their total cost calculation

Exhibit 3: Base Station Own or Lease? Exhibit 3: Base Station Own or Lease?
Before diving into calculating the cost of base stations, ask the candidate to list pros Candidate should realize that it is cheaper to rent and should suggest to rent,
and cons for building vs. leasing base stations. assuming $150K per station. This should be used in final cost calculation.

Brainstorm should be organized and show structure.

Brainstorm sample answer:

Build
- Pro
- Complete control over network footprint
- Best tower real estate can be used for network
- Con
- Very costly to own / operate
- Longer time-to-market

Lease
- Pro
- Smaller upfront investment
- Time-to-market advantages as towers already exist
- Con
- Availability of towers coverage not possible if tower real estate
unavailable in given location

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Case #45: Telecom Co. (7/8)
Math: Info Math: Calculations
Base Station Base Station Cost
A good candidate should know: Estimating number of households
- U.S. population 300M / 2.5 = 120M households
- Persons per household (2.5)
Marketshare
When asked, give the candidate the information below: 120M x 5% = 6M households
- Market share (estimated by management) is 5%
- Base station bandwidth is 80, 000 kbps Households per base station
- Bandwidth required per household is 320 kbps (80,000 kbps / 320 kbps) x 2 = 500 households per base station
- % of concurrent connections is 50%
***multiplied by 2 to account for concurrent connections (50%)
- Telco companies balance the cost per subscriber and required
bandwidth per subscriber by estimating % of users online at the same
time Number of base stations needed to service 6M households
- Cost per base station is $150K (to lease) 6M / 500 = 12,000 households

Base station cost

12,000 x 150,000 = $1.8B

CPE Cost
Total cost
Customer Premise Equipment
$150 x 6M = $900M
- CPE cost is $150 per household
- Client estimates that 2/3 could be passed through to the customer
Pass on 2/3 to customer
$900M x 1/3 = $300M

TOTAL COSTS
Spectrum = $500M Base Station = $1.8B CPE = $300M
$500M + $1.8B + $300M = $2.6B

REVENUE
6M subscribers x $20/month x 12 months = $1.4B / year
Revenue from offering
- Broadband internet service price is $20 per month

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Case #45: Telecom Co. (8/8)
Recommendation Risks / Next Steps

Telecom Co. should not invest in WiMAX due to high up-front costs and 1. Lose market share to competitors
lower revenue lift. Identify other areas of value to retain customers. This could
be done by tech innovations or partnerships.
Telecom Co. should focus on defending existing core services such as 2. Lose out on high growth opportunity
satellite TV. Research customer trends to quantify the potential in WiMAX
market

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