1. Case Interview Workshop 16 September 2005 www.ibc.uiuc.edu

2. 2 Illinois Business Consulting (IBC) “To establish IBC as a premier consulting organization managed by students, to deliver high quality solutions to client problems and to nurture future consultants for the business world.” Mission of Illinois Business Consulting: Description of IBC: An integral component of the College of Business, IBC is a student managed consulting organization. IBC performs 40-50 projects per year for Fortune 500, mid-sized, new venture and not-for-profit clients. The organization enables graduate students and select undergraduate students to apply their classroom learnings to real business issues.

3. 3 What is a case interview?  Simulation of a realistic situation between a client and a consultant, similar to a mini-business case  Typically found in later rounds of interviewing, as the process becomes more competitive  More likely to be used in interviews for consulting or finance- related positions (i.e. investment banking)  Usually part of a longer interview that includes fit and behavioral questions as well  Can range widely depending on the company

4. 4 Why do companies use case interviews?  Interpersonal skills: do you appear confident and comfortable?  Communication skills: can you articulate your thoughts and do you listen carefully?  Organizational skills: can you see the broad picture and can you identify an appropriate framework for your analysis?  Strategic thinking skills: have you considered all the aspects of the case and how your solution will affect the organization?  Creativity skills: are you able to think “outside the box”?  Analytical skills: can you identify the important data and explain the implications it may have on the organization? Case interviews evaluate much more than functional and technical skills.

5. 5 What are recruiters looking for? Tolerance for ambiguity Communication skills Problem solving ability Recruiters will assess if you have the minimal skills necessary to succeed in the position.

6. 6 Types of case interview questions  Brain teasers  Profitability or sales analysis  New market or market expansion decision  Value chain and/or organizational efficiency  Organizational review or change  Industry analysis  Investment decision There are a number of different types of case questions that you may encounter.

7. 7 Brain teasers  Objective: to understand how you think through a problem –Can you think logically? Does your approach make sense? –Are you creative in your thought process?  Example: How many McDonald’s hamburgers are sold in the United States each day?  How to handle it –Estimate based on what you know –Talk through your approach to demonstrate your logic

8. 8 Recommended approach to case questions 1.Listen closely to the client situation and the question(s) you are being asked to address. 2.Confirm your understanding of the case by paraphrasing the situation and question(s) back to the interviewer. 3.Select an approach to structure your analysis that focuses on the critical issues of the case. 4.Analyze the problem. Ask the interviewer focused questions to clarify your understanding of the situation. 5.Summarize your key observations and conclusions. Be sure to follow a logical structure. Use the following approach to structure your response to the question:

9. 9 Structuring your response In order to make sure you cover all relevant aspects of the case question, it is helpful to break down the question into a number of smaller questions you can address. You may want to begin by mapping out the issues that you want to address first, and then more thoroughly analyzing each area you identify. Case question Question AQuestion BQuestion C Question 1Question 2Question 1Question 2Question 1Question 2

10. 10 Profitability/sales analysis  Objective: to determine your understanding of what impacts profitability/sales –Do you understand how different financial statements are related and what they can reveal about a company? –Can you tailor your analysis to the specified company or industry?  Example: A computer manufacturer is experiencing a decrease in profits. What should the company do?  How to handle it –Think through all aspects of the income statement (both revenues and expenses) –Consider costs (fixed vs. variable, economies of scale, utilization, etc.), customers (price sensitivity, segmentation, cost-benefit trade-off), competition (pricing, capacity, differentiation), channels (relative leverage, strategy) –Remember to consider the market that the company is in – what are the market/industry trends?

11. 11 Example response structure Why are profits decreasing? CompanyCustomers Market/ Competition Channels Costs Revenues Capabilities Fixed vs. variable Utilization Economies of scale Costs vs. benefits Segmentation Price sensitivity Differentiation Capacity Pricing Strategy Relative leverage

12. 12 New market/market expansion decision  Objective: to determine your understanding of what to consider when entering into or expanding in a market –How would you assess the attractiveness of the market? What market trends do you expect? –Have you considered both the capabilities of the company and of the competition? Does the company have a competitive advantage?  Example: A fast food chain is considering adding delivery service to its offerings. What should the company consider before implementing this decision?  How to handle it –Consider the size of the market and growth trends, the competition, customer needs and desires, implications on the production process and the client’s capabilities, synergy with and/or potential cannibalism of current products, and the economics of the market –If the case is more focused on marketing strategy, consider the 4P’s: product, promotion, price, and placement/distribution

13. 13 Value chain/organizational efficiency  Objective: to determine your understanding of the manufacturing process and the value chain –Can you identify the driving factors that affect efficiency in the specified industry?  Example: Congratulations, you were just hired as the manager of a video rental store. How would you measure its efficiency?  How to handle it –Think through the value chain for this industry –Manufacturing value chain includes suppliers, design & engineering, manufacturing, marketing, sales, distribution, service –Consider the expenses, the production time, inventory turnover, product availability (down for repairs, etc.), seasonality of the business, number of employee sick days, employee turnover

14. 14 Organizational review or change  Objective: to determine your understanding of organizational design and internal management –What is the culture of the organization? How will changes affect the employees and the organizational environment? –How does the internal organization compare with its competitors?  Example: Your client needs to cut 10% of its budget and plans to downsize in two major business units. What would you recommend they consider?  How to handle it –Think through the elements of organizational design –Consider the client’s business, the scope and timeline for the change, the organizational culture (open to change, committed, etc.), major risk factors –Also consider what messages the company should send regarding the changes to employees who are let go and those who are retained, as well as to customers and the media/public

15. 15 Industry analysis  Objective: to determine your understanding of what to consider when entering into a new industry –How would you assess the attractiveness of the industry? What are the industry trends?  Example: A computer retailer is considering offering technology consulting services. They have asked you to assess the attractiveness of the industry and whether they should enter it.  How to handle it –Consider the attractiveness of the industry using a framework such as Porter’s 5 Forces (substitutes, buyer power, supplier power, barriers to entry/exit, rivalry) –Also think about the company’s capabilities and if the new industry would be synergistic with current products/services, and consider any potential partnerships

16. 16 Investment decision  Objective: to determine your understanding of what to consider when making a financial investment –What are the key drivers that will affect the profitability of the decision? –How will this decision affect the company’s current operations?  Example: A toy manufacturer is considering building a new plant in Southwest Asia to take advantage of less expensive labor. What factors should management consider?  How to handle it –Think about the industry: market size and dynamics, future industry trends, pricing dynamics, product differentiation and standards –Think about the company: current position in the market, how the company is performing, distribution of costs –Consider the competition: plans to expand, strength of competitors

17. 17 Case interviewing tips  Use the five-step recommended approach  Think out loud to demonstrate your train of thought as you consider the case question  Use a framework to structure your response and let the interviewer know that you are doing so  Ask clarifying questions as you go to better understand the situation  Make your assumptions clear to your interviewer  There is no single right answer, but it is important to provide rationale for your conclusions and to demonstrate a logical thought process  Take your time and do not rush to conclusions  Practice case interviewing with others as much as you can because the best way to prepare yourself is to practice

18. 18 How does it really work? The case: Whole Foods is considering opening a new store in Champaign- Urbana. The store would be located in southwest Champaign. Would you recommend that they move forward with the store opening?

19. 19 Example response structure Should Whole Foods open a store in Champaign? IndustryCompany Market/ Competition Industry trends Market dynamics Market size Cost distribution Current performance Current position Number/strength of competitors Plans for expansion Pricing dynamics Differentiation

20. 20 Practice makes perfect Pick a partner and take turns “cracking” the following cases…  Case 1: Subway is considering implementing delivery service of its products. They have asked for your advice. Would you recommend that they do so?  Case 2: Sears has been struggling to remain profitable over the last several years. They are seeking your help in determining how they can increase their profits. What do you recommend?  Case 3: Ford Motor Company has decided to close another U.S. plant and move its operations overseas to Asia. Ford management has asked you to assist with delivering the message to its workforce and the media. What would you recommend?  Case 4: Carle Foundation Hospital in Champaign wants to maximize its efficiency in response to concerns about rising health care costs. Management has asked you to help them determine their current efficiency level and how they might improve it. What would you recommend?

21. 21 Additional resources  Business Career Services – advice, resources, mock interviews  Consulting firm websites – check the careers section –www.bcg.com, www.mckinsey.com, www.bain.com  Vault and Wet Feet publish various case interviewing guides  Other business school websites Sources for presentation content include www.bcg.com, www.bain.com, business.tepper.cmu.edu