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In this post we are going to cover foundational things you need to know to prepare for consulting case interviews.
Case interview is a type of interview consulting firms use to select consulting candidates. Case interviews help consulting firms test candidate’s analytical abilities as well as FIT, including leadership abilities. This guide includes beginner information as well as some in depth information on how to prepare for the consulting case interview.
A case interview is a specific type of job interview used by consulting firms to test person’s abilities and fit. Case interviews are among the hardest job interviews and focused on testing both “soft” skills such as communication and “hard” skills such as problem-solving skills. Case interviews usually last 30-45 minutes each and often involves multiple interviews on the same day.
Case interviews are modeled to test the type of skills consultants need during actual projects, such as an ability to solve difficult problems, deal with large amount of data, being able to be likeable and build good relationship with clients. So succeeding in a case interview is an indicator that someone will likely be a good management consultant.
During the case interviews interviewers testing primarily for thinking process versus the ability of a candidate to arrive at a correct answer. If candidate arrives at a correct answer they can still be rejected if their thinking process was considered inferior, if their thinking was not structured enough. Although, sometimes excellent candidates are rejected just because there are not enough spots to take them in. In fact some firms are known to run recruitment process with MBA schools even in downturns when they have no intention to hire anybody. They do this because recruitment in schools is a part of their marketing process. They want students to be familiar with their firm, and to consider their firm later on when some students move to executive roles or overall roles of enough influence where they can bring in consultants.
Before we go deeper into this case interview guide, we want to share 2 gift resources with you that will help you prepare for your case interviews. One is brain teasers with answers that will help you practice brainteasers. Another is an estimation cases guide. Estimation cases form an important part of consulting case interviews and you can benefit greatly from having access to this guide.
Case interviews are conducted in 4 main ways:
In this type of situation the interviewer presents a busienss case to the candidate and expects the candidate to lead the case. Interviewee-led cases are much harder than interviewer-led cases. As the case progresses the interviewer may be providing additional information sparingly. An example of a business case may be “Our client is an auto manufacturer. They noticed a decrease in profits of 5% over the last 24 months. The CEO wants to know what is the cause of this decrease.” Interviewee-led cases are usually much harder because the interviewer is offering fewer prompts to the candidate.
With interviewee-led cases, the interviewer rarely intervenes. The candidate is responsible for leading the approach, starting with clarifying the key question, to structuring the proglem, to putting together a framework, getting data that is needed, synthesizing findings, and sharing recommendation.
Interviewer-led interview is usually structured into a few sections. At the begining the interviewer describes the case and asks interviewee a few questions such as “How would you structure your analysis?” They are looking to check if candidate can think in a structured way and develop an effective structure, which is also called framework, to solve a particular case. When interviewer is happy with the initial framework they usually guide candidate in the direction they want candidate to go in terms of analyses needed for a particular case. Interviewer-led cases are generally much easier to handle than interviewee-led cases.
With interviewer-led cases the interviewer controls the process of solving the case. The interviewer guides case interview candidate to follow specific paths, which parts of the problem to focus on analyzing. The interviewer expects the interviewed to be insightful as it relates to every small part of the interview through which interviewer is guiding the interviewee. Often interviewers do not stick to interviewer-led or interviewee-led style. They land somewhere in between. However, for practice purposes it is important to be prepared for extremes, meaning for fully interviewee-led and fully interviewer-led cases.
You are probably familiar that some consulting firms prefer to also incorporate into a case interview process a group case interview. They like to use it to test how you work in a team. Are you trying to get all the credit or are you able to work with colleagues for the greater good of the project. In a group case interview a small group of candidates are given a case. They are asked to solve the case together, while interviewer observes.
Some consulting firms like to also have a written or presentation interview as part of the consulting case interview process. Those are quiet difficult to handle. You are usually given a huge amount of information and you need to prioritize what is important because you would not have time to take into account all information. The information you are given, on purpose, includes unimportant data and tests your ability to know what information you need and which information should be ignored. At the end of the written or presentation interview you are expected to present your analyses and recommendation.
In addition to different types of interviews, there are also different types of cases such as profitability cases, acquisition cases, operations cases, etc.
Below we will include some examples of interviewee-led and interviewer-led cases, because only by practicing actual examples can you really get a feel for what it is like to be in a interviewee-led versus interviewer-led cases. Since interviewee-led cases are significantly harder, we will mostly spend time on practicing interviewee-led cases. Generally, if you get to a point where you are really good at handling interviewee-led cases, interviewer-led cases become a piece of cake to handle. It is like running with weights on versus without weights on.
This particular video was recorded a few months after we completed training Rafik (The Consulting Offer Season 1). You can find full training with Rafik on StrategyTraining.com. This case is one of the most challenging market entry cases we use with our clients. This is one of the most difficult market entry cases you can do because most market entry cases have a strong market atractivenesselement and market profitability element. Very few people pay attention to the operational issues of entering the market. Market entry cases usually are focused on analyzing the market worthiness. This case is particularly difficult because it looks at operational issues.
In this video you can practice a McKinsey style cases. It is a medium-level difficulty and should take you 15-20 minutes to handle.
You will find the question at 2:02 minutes. The part in black is the portion of information the interviewer would share with you. In grey, you will find information that the interviewer may share as the case progresses. The interviewer is watching to see if you understand the case and if you ask the right questions.
While the question for this case is straightforward, we will show you how you can further adjust it to make it even more straightforward.
In a case, everything rests on the key question. If you don’t get it right, you are in a lot of trouble. Similarly, in a real consulting engagement if the key question is wrong, the team and the client are in a lot of trouble. The answers can always be found. But asking the right question is something that most people don’t pay enough attention to. In this case a lot of information is provided. Take time to understand it and structure the case.
If you ask for more information, always explain why it is needed. And first show progress to the interviewer. This way they will be more willing to provide more information. Think of it as barter. Make sure you use the case information provided and continue to push the case forward. In an interviewee-led case you are the leader. Imagine you are a project manager, you have to keep pushing the project forward.
Here is another example of interviewee-led case, completed by Yale SOM Consulting Club. This case is a good example of the type of case you will get in BCG, McKinsey or Bain case interview.
This case is focusing on supply chain side. Generally operations cases can be approached in 2 ways: strategy and operations. Within operations you can focus on productivity and the supply chain side. This case is also interviewee-led, which means it is much harder than interviewer-led cases. In fact, within FIRMSconsulting, we place a huge emphasis on teaching how to handle candidate-led cases, versus relying on the interviewer to lead the case. This particular case will be considered an operations, interviewee-led case. One of important components of case interviews is brainstorming. Pay attention to brainstorming at 14:50. This brainstomring likely includes at least one idea you would not come up with if you were solving the case, before seeing this video.
Here is another interviewee-led case. This case is focused on profitability. The author mentioned it was taken from his final interview with Bain.
And let’s take a look at one interviewer-led case example. Staying with profitability cases, lets examine declining profits at a Pharma company. While it is an interviewer-led case, it is a very challenging case. There is no point to look at easy cases. If you sweat more in practice you will bleed less in battle. As part of the case you will need to explain the importance of portfolios and R&D profitability calculations.
We have worked with many clients who didn’t have busienss educational background. In fact, many of our success stories are documented in The Consulting Offer, where you can see candidate’s journey from starting training with us all the way to receiving an offer or joining McKinsey, BCG, Bain, Deloitte, etc. While a business degree is not required, business judgement is. Because case interviews presend candidates with real business problems, knowledge of certain business concepts is crucial. Below we will share with you an overview of some of the key business concepts you need to know.
Income statement format is something you need to know by heart. Income statement also sometimes referred to as profit and loss statement (P&L). It is one of the most important financial statements. Others are, of course, balance sheet, cash flow statement, and statement of changes in equity.
If you think of money is river leading to a dam, the income statement and a cash flow statement record the moment of money over a specific period of time. In other words, it is the amount of water flowing down the river over a specific period of time. The balance sheet, which is also called financial position statement, is the dam. All water collects there.
The income statement calculates if the organization earned a profit or incurred a loss during a particular period of time. It shows how profitable organization over a specific period of time.
If organization generated a profit, then it will be reflected in the bottom line of the income statement, in net proft after taxes. This also called net income. Below we share with you a standard format for income statement.
Sales revenue
LESS: Cost of goods sold*
= Gross profit
LESS: Operating expenses
= EBIT (earnings before interest and tax/operating profit)
LESS: Interest
= Net profit before tax
LESS: Taxes
= Net profit after tax
LESS: Preferred stock dividends
= Earnings available for common stockholders
To calculate Cost of goods sold, one needs to follow the steps:
Opening inventory
Add: Purchases
Less: Closing inventory
= Cost of goods sold
The balance sheet, which is also called financial position statement, reflects assets, liabilities and equity of the organization. Assets, at an individual level, can include a fully paid-off house, a paid-off car, paid-off furniture and electronics in the house. For a business, assets may include a paid-off building, paid-off equipment, paid-off vehicles. Liabilities at an individual level include things like mortgage on a house, payment for car lease. With liabilities you owe someone money. With assets you have an opportunity to use an asset to earn money, such as by offering your house for rent.
Now lets define liabilities more formally.
ASSETS
Assets are any tangible or intangible economic resources that a company or individual possesses and which can be used to cover the individual’s or company’s debt. Assets are further broken down into current assets and non-current assets. Current assets are expected to be converted into cash within 12 months. Non-current assets are assets which are not expected to be converted to cash within 12 months period.
LIABILITIES
Liability is a legal obligation to settle debt which arises as a result of a past transaction or event. Liabilities can also be current or non-current. Current liabilities are debts and obligations which must be settled in the next 12 months. Non-current liabilities are debts which must be settled at a date that is further into the future than 12 months period.
(1) ASSETS
(1.1) Current assets comprise:
Cash
+
Marketable securities
+
Accounts receivable
+
Inventories
=
Total current assets
(1.2) Non-current assets (fixed assets) comprise
Land and buildings
+
Machinery and equipment
+
Vehicles
+
Fixtures and Furniture
+
Other (for example financial leases)
=
Total gross fixed assets
Less: Accumulated depreciation
=
Net fixed assets
+
Other assets (investments, goodwill, copyrights and patents)
=
TOTAL ASSETS
(2) LIABILITIES AND (3) EQUITY
Liabilities comprise current and non-current liabilities:
(2.1) Current liabilities:
Accrued expenses
Here are some key concepts that you can benefit from knowing before starting going through consulting case interviews.
ACCOUNTS PAYABLE
Also called trade credit and refers to funds payable to suppliers. It refers to situations when suppliers provide their products and services on credit. Suppliers usually extend interest free credit for 30, 60 or 90 days.
ACCOUNTS RECEIVABLE
This is the amount of money your customers or clients owe your organization for goods or services you supplied to them. This total value can give you a snapshot of the amount owed to your business by customers/clients at a given time.
ASSETS
Key business terms include many accounting terms. This one is one of the key accounting terms. An asset is any tangible or intangible economic resource that a company or individual possesses and which can be used to cover the individual’s or company’s debt. For example, in case of an individual, retirement savings and stocks are examples of assets. In case of a company, fully owned equipment and buildings are examples of assets.
B2B / B2C
B2B – Stands for business to business. Refers to the types of clients and customers company serves. B2B businesses serve other businesses.
B2C – Stands for business to consumers. Refers to the types of clients and customers company serves. B2C businesses serve individuals.
CAPITAL GAIN
Occurs when an asset is sold for more than its book value, then any value above the original total cost of the asset is referred to as the capital gain. Any value above the book value and up to original total cost of the asset is called the recaptured depreciation.
CASH FLOW
Cash flow refers to the movement of money in and out of your organization. You want inflow of cash to always be greater than outflow of cash. This is referred to as positive cash flow.
CORPORATE GOVERNANCE
Was defined by Ehlers and Lazenby (2004:49) in the narrow sense as the formal system of accountability of the board of directors to shareholders and in the broad sense as an informal and formal relationship between the corporate sector and its stakeholders and the impact of the corporate sector on society.
COST OF CAPITAL
Is the required return the business needs to earn on its investments (capital budgeting projects) to maintain the market value of the firm’s shares and to attract funds. It is a measure used to determine whether or not certain project will decrease or increase a firm’s value in the market place and, consequently, whether or not it should be recommended.
If NPV is more than zero and IRR is greater than the cost of capital than a proposed project will increase the market value of the firm and it should be recommended. If, however, NPV is less than zero and the IRR is lower than the cost of capital, then a proposed project will decrease the market value of the firm and it should not be recommended.
Therefore, if a firm’s risk is assumed to be constant, than any projects with the rate of return higher than the cost of capital will increase the market value of the firm and any project with the rate of return below the firm’s cost of capital will decrease market value of the firm.
DEPRECIATION
Depreciation is an accounting and tax concept used to estimate the loss of value of assets over time. For example, factory equipment depreciates with use.
DIVERSIFICATION
Diversification is a product-market strategy that involves the development or acquisition of offerings that are new to the organization. It also involves the introduction of those offerings to the target markets which were not previously served by the organization. For example, a mining company may consider expanding into bottling water business to diversify (actual client situation from my management consulting days).
NET WORTH
Is the personal assets less personal liabilities of an individual.
NET PROFIT
Net profit is also referred to as the “bottom line.” It is calculated by taking total revenues and subtracting total expenses. This amount is especially important when calculating taxes.
NET LOSS
If when total expenses deducted from total revenue you end up with a negative number, it is referred to as net loss.
NPV (KEY BUSINESS TERMS TO KNOW)
This is a sophisticated capital budgeting technique. It is determined by finding the present value of cash inflows and then subtracting an initial investment.
NPV =Present value of cash inflows – Initial investment.
PARETO RULE
Is the tendency for 20% of effort to account for 80% of the impact. For example, when 20% of clients account for 80% of sales revenue.
RETURN ON INVESTMENT
Return on Investment, also referred to as ROI, shows a gain or a loss on a business investment relative to the amount spent on the investment. It is calculated by dividing net profit by the cost of the investment.
SUNK COSTS
Are the costs associated with the old asset which was already incurred in the past. Therefore, it should not affect the decision regarding a proposed project and should not be taken into consideration when determining incremental cash flows.
SYNERGY
Occurs when the hole is greater than sum of its parts. For example, in terms of math it could be represented as “1+1=3”. In business it means that Company A and B can produce collective profits of $30m. However, if they merged, due to a variety of factors such as cost savings etc, they can increase their profits to $42m. The $12m is the synergy value.
WORKING CAPITAL
This is the capital an organization utilizes in its day-to-day activities. It is the difference between current assets and current liabilities. It provides an indication of a business’s ability to meet its current obligations.
For more busienss strategy concepts that will be useful to know in preparation for consulting case interviews refer to Business terms glossary – A to Z.
Here are a few good case examples you can use.
You may be searching for great case books to help you practice cases. Here are consulting case interview case books from major clubs. As you are practicing cases while preparing for your case interviews remember to practice correct technique. Practicing bad technique can hurt you more than helping you. Also, practicing with people who have bad technique can hurt you more than not practicing with anyone at all. To learn the right technique in detail we recommend The Consulting Offer seasons 1, 2, 3, 4, and 5 on StrategyTraining.com.
During an MBA there is often a choice, should I go after consulting or banking? Because given the amount of workload MBA schools ensure candidates have, there is no time for both. How do you make this choice? Here is a video from someone who worked in both, major consulting firms and a major banks.
Now that you had an opportunity to get an input on why should you select going after consulting or banking, let’s take a look at some of the key reasons why people select consulting. Why consulting is one of the key questions during consulting case interviews, so it is important to do some soul searching and to determine how you will answer this question. More importantly, gaining much better understanding on why people select consulting, and stay in consulting, will give you even better understanding if consulting is actually the right path for you. One of the worst things you can do is pursue a career path that is a completely wrong fit for you, only to realize this 2-5 years down the road.
Before you can get an invite to attend a consulting case interview you need to look like a promising enough candidate. Having a strong resume plays a key role. In this video we share some of the key steps to make your resume attractive for consulting firms. There is no point in preparing for consulting case interviews if you have little chances of getting an invite. Most candidates never get invited to interview with major consulting firms. So the first hurdle is to get an interview invite. And a resume is a crucial step in that process. Even if you have contacts at major firms that can motivate for you to get an interview, poor quality resume can mean automatic rejection before you even have a chance to showcase your consulting case interview abilities.
Meet Jen Nwankwo from The Consulting Offer season 3, who we trained to join Bain Boston. In The Consulting Offer season 3 you can watch Jen’s journey, but in this interview you can learn a little more about Jen and get her feedback on what it was like to go through the final steps to get an offer from Bain. You can watch all episodes with Jen on StrategyTraining.com (Premium, Insider or Legacy).
Meet Ritika Mohan, from The Consulting Offer season 5. Ritika joined McKinsey Chicago. You can watch all episodes with Ritika on StrategyTraining.com (Premium, Insider or Legacy).
And here you can watch how Ritika answers McKinsey PEI question “Tell me about an accomplishment you are proud of.”
Here you can view our discussion with Ritika if one needs to memorize frameworks. This discussion was in preparation for Ritika’s McKinsey interviews, which resulted in McKinsey offer.
Meet Alice Zhou. Alice is an increadible woman we have been working with for many years. Alice was in The Consulting Offer 2. That season was hosted by Kevin P. Coyne, former McKinsey partner and former McKinsey worldwide strategy practice co-leader. You can watch all episodes with Alice from The Consulting Offer season 2 on StrategyTraining.com (Premium, Insider or Legacy).
Theses are just some of our impressive candidates from The Consulting Offer.
If you would like to fast track your case interview preparation and maximize your chances of getting an offer from McKinsey, BCG, Bain, Deloitte etc, we welcome you to train with us. The Consulting Offer program, which is a part of Premium membership, was designed specifically for this purpose.
There is nowhere else in the world where you can see real candidates trained by former partners from major consulting firms. You will see the candidate’s progression through each step of the case interview preparation process. And you will see candidates receiving real offers from McKinsey, BCG, Bain, Deloitte etc.
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If there are any other case interview examples that you think are worthwhile to be included on this page, please let us know.
Have questions? Email [email protected].
