Case_workshop_carnegie_mellon

nullCONSULTING AND CASE INTERVIEW WORKSHOPCONSULTING AND CASE INTERVIEW WORKSHOPGSIA CONSULTING CLUB October 6, 2001AgendaAgendaBefore the Interview Interview Summary Fit Interviews Case Interviews Frameworks nullWhat industries do they serve? What specialty functions? Who is the client? CEO or operational unit? Where does the work take place? The office or the client site? How many projects does an associate work on at a time? One or two? Do your research on the firm!!!nullFirm brochures – available at COC Firm web sites HBS “Career Guide: Management Consulting” Wet Feet Press “So You Want To Be a Management Consultant” [wetfeet.com] Vault Reports “Industry Guide: Management Consulting” [vaultreports.com]Many resources are available to do your researchnullOther reference materialsBooks Vault’s Guide to “The Case Interviews” Vault’s Guide to “Finance Interviews” Martin Yate’s “Knock Them Dead” Web Sites Firm Web Sites Vault & Wetfeet nullConsulting interviews typically last 45 minutes2-55-1020-252-5Time (Minutes)Total 45Case Interview – Success CriticalThe Fit InterviewThe Fit InterviewnullDo not underestimate the importance of fit Every interview is a fit interview! Go through your resume and have a story for each point Practice answering key questions. Warm up for case interviews with a few: Why consulting? Why you? Why this firm? Tell me about xyz on your resume. What made you decide to do xyz? What was the greatest challenge in accomplishing xyz?Preparing for fit interviewsnullThe Case InterviewnullWhy case interviews ?Snapshots of Consulting EngagementsSimulate a “typical” situation between a client and a consultant?nullRecruiters look for three primary characteristicsAssess if the candidate has aptitude forProblem solvingTolerance for ambiguityCommunication skillsMinimal skill sets a consultant uses dailynullCase interviews evaluate far more than a candidate’s functional and technical skillsSkillKey QuestionsInterpersonal skills Communication skills Organizational skills Strategic thinking skills Creativity skills Analytical skillsIs the candidate relaxed and confident? Is the candidate engaging? Is the candidate a good listener? Is the candidate asking insightful, clarifying questions? Is the candidate good at organizing the information provided? Is the candidate good at developing a framework for analyzing the information? Is the candidate stating assumptions clearly? Is the candidate comfortable discussing the multifunctional aspects of the case? Is the candidate examining the organizational and cultural issues as well as the functional and strategic? Is the candidate approaching the problem at the right level of detail? Is the candidate thinking creatively? Is the candidate demonstrating analytical horsepower? nullTYPES OF CASE INTERVIEWS AND FRAMEWORKSnullThe Cost-Revenue ModelRevenueCostPriceQuantityFixedVariableX)(+)Price discrimination Changes in pricing structure Viability of pricing over time Discounts or couponing Competitor’s pricingCustomer segmentation New/existing Loyal/ switchers Channel restrictions or temporary disturbances Changing consumer demandsCapital equipment Land BuildingsLabor Materials Energy—Profit(nullThe “Four Cs”Market Positioning of XYZ CompanyBreak down the company’s cost structure Fixed Variable Estimate the competitor’s cost structure Understand trends in cost structuresSegment the company’s customer base New/existing Loyal/ switchers Examine company profitability by segment How much do they purchase? At what price?Identify major competitors Traditional Unexpected substitutes What are the competitor’s strengths and weaknesses Profits Costs Investigate market shareCostsCustomersCompetitorsIdentify relative channel leverage Sources of advantage Sustain-ability Impact of channel strategies on market positioning ChannelsnullThe “Four Ps”ProductPlace (Distribution)PromotionPriceHow effective is this product’s marketing campaign?nullPorter’s Five ForcesEconomies of scale Capital costs Cost advantage of existing competitors Barriers to exit PatentsBarriers To EntryNumber and size of competitors Industry growth rate Product differentiation factors Industry margins/pricingMarket RivalryRelative price/value of the substitute compared to industry’s product Cost of switching to substitute Buyers’ propensity to switchSubstitutesNumber and size of suppliers Switching costs/product differentiation Availability of substitutes Possibility of forward integrationSupplier PowerSignificance of the purchase relative to cost structure Switching costs Purchase volume Threat of backward integrationBuyer PowernullValue ChainServiceDistributionSalesMarketingManufacturingDesign and EngineeringSuppliersCost Quality Cycle Time TechnologyValue Engineer. Research Development Timetable Investment hurdle Prototyping Costs (Labor, overhead, WIP, Capacity) Process (Throughput, general flow, economies of scale, yield, best practice, utilization, asset base, technology)Research Price elasticity Promotion Channels Size of sale force Logistics Agency systems vs. in-house Commission structure Retention/attrition levels Volume vs. profitMargins Inventory turns Level of support Logistics network Structure of network Delivery/batch sizesResponse time Enabling technology Labor requirements Satisfaction levelsnullFinancial AnalysisEstimate Future Cash Flow Revenues - Costs Estimate Discount Rates Look at comparables Attain Net Present Value (NPV) Discount future cash flows at appropriate discount rate Consider Other Synergies Reasons for go ahead despite negative NPVnullBrain TeasersKnow Some Basic Statistics US Population: 250 mm Households: 100 mm Employed: 60% Married: 60% Ave Income: 30k per year Income Distribution: $0-25k: 30%, $25-75K: 55%, $75k+:15% Education: High School - 75%, Bachelors degree - 20% (Note: All figures are estimates) Elevator Question nullFive general types of casesInvestment/ DivestmentIndustry AnalysisMarket ExpansionPricingProfit ImprovementIndustry analysis case studiesIndustry analysis case studiesA manufacturer of automotive batteries is losing market share and profitability is decreasing. What should the company do? A leading manufacturer of automobiles is considering acquiring a national rental car company. What factors are important in this decision? A group of investors is considering building a 40,000-seat concert pavilion in the Northwest suburbs. What factors should they consider? A national provider of in-home health care services is considering purchasing a regional managed care facility with 250 physicians. What factors should our client consider in making this decision?ExamplesIndustry analysis case studiesIndustry analysis case studiesKey Points Candidate Should ExploreMarket Competition Customer/supplier relations Barriers to entry/exit FinancialsMarket size and segmentation Analyze product demand/trends Customer requirements Analyze competitive economics Determine levels of Product differentiation Market integration Industry concentration Evaluate negotiation power Identify substitutes Assess vertical integration Evaluate companies entering/exiting Determine competitor reaction to new entrant Analyze economies of scale Predict learning curve Research government regulations Identify key financials Evaluate potential ROI Assess risk factors of industry Determine fixed and variable costsMarket expansion case studiesMarket expansion case studiesU.S. domestic express package company; both air and ground transport capability. Over $7 billion in revenue. Highly profitable. European company suggests they form an alliance to provide service between the U.S. and Europe. Should the client enter the international market? If so, what should the client’s strategy be? How should revenues be split? European manufacture of confectionery products wants to enter the U.S. market with premium product line. Should the client consider entering the U.S. market? A national retailer has approached our client, a manufacturer of fast-moving consumer products, and asked them to consider manufacturing a private label product line for them. The manufacturer is burdened with excess manufacturing capacity, so the proposal looks attractive. What factors should management consider in making the decision?QuestionsMarket Entry Case StudiesMarket expansion case studiesMarket expansion case studiesKey Points Candidate Should ExploreSize of market Understand competitors Analyze customer needs Assess client’s capabilities Understand economicsIdentify data sources for market size Understand growth trends Identify current service providers Evaluate strengths/weaknesses Estimate competitors’ cost structure Identify key customer segments and respective needs Identify gaps in current services Discuss cost-benefit trade-offs Identify client’s strengths and weaknesses Compare client capability to competition Understand client’s cost structure Determine potential competitive advantages Project expected revenue and costs Estimate capital expenditures Perform sensitivity analysesProfitability case studiesProfitability case studiesThe U.S. subsidiary of a French spring water bottler is experiencing a drop in profits. Why? A Japanese automotive components (brakes, shocks, struts) manufacturer with a 12% share of the U.S. market is experiencing declining profits. 20% of the products are shipped in from Japan and 80% are manufactured in U.S. facilities. What might be causing the decline and what actions should be taken? A company makes stairmasters, treadmills, etc. to sell to health clubs. How can profits be increased? Your client is a consumer products company. The board wants to know if its advertising campaign for their new brand of chips has been successful. How would you evaluate the campaign’s performance?ExamplesProfitability case studiesProfitability case studiesPlant utilization Quality Economies of scale DistributionCosts Fixed and variable Labor costs Suppliers Materials Customers Price sensitivity Segmentation Cost-benefit trade-off Competition Pricing Capacity Basis of differentiation Channels Relative leverage Market segmentation StrategyKey Points Candidate Should ExplorenullPricing case studiesHow should a major retailer price its services in the electronic and appliance service business? Your client is a concert pavilion. Revenues at performances are declining. Given the concert pavilion’s goal is to maximize exposure while covering costs, what should be done? An inventor of a new athletic shoe wants to know: (1) What the market is for his goods, and (2) how to produce it. What steps should be taken?ExamplesnullPricing case studiesIdentify the type of market Monopoly Oligopoly Perfect competition Issues to address Consider what the market will bear Think about the long-term effects of pricing decisions Think how the competition will respond to changes in pricing What is the elasticity of demand? Consider the consumer’s sensitivity to price changes Consider methods to create price discrimination Consider using strategic tactics such as creating “loss leaders” or “traffic builders”Key Points Candidate Should ExplorenullInvestment casesAn automotive manufacturer is considering consolidating three of its East Coast assembly plants into one location. What factors should it consider? A German manufacturer of consumer products is considering opening a manufacturing facility in Poland to meet Eastern Europe’s growing demand for its products. What factors should the company consider? A Midwest-based pharmaceutical company is considering opening distribution warehouses on the West Coast to handle the growing Western territory. What factors should it consider? A company of chocolate and confectionery products is considering acquiring a regional soft drink manufacturer. Are the distribution synergies sufficient enough to justify an acquisition?ExamplesnullInvestment casesSustainability of profits in segment Market size and dynamics Competitive position Product differentiation and standards Price dynamics Distribution of costsKey Points Candidate Should ExplorenullSummary of advice...Understand the objectives of the case interview; clarify issues if necessary Use notes and take time to collect your thoughts Use a standard methodology Think “top down”— big picture first Focus on identification of issues, developing and testing hypotheses, and next steps, not just right answers Use good communication skills — state and revisit your assumptions Be “coachable” and integrate feedback quickly Be confident and relaxed Read industry journalsnullQ & A