introduction to case cracking analysis

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Introduction to case crackinganalysis & consulting

recruitment processPhilippe de La Chevasnerie

HEC MSc Strategic Management

October 2013

[email protected]


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1Introduction to case cracking analysis HEC October 2013 Philippe de La Chevasnerie -

Introduction to case cracking & consulting recruitmentprocess by an alumnus

Teaching as a MSc Strategic Managementalumnus

Not speaking for the firm in any ways

This is not a McKinsey lecture

Not exhaustive, based on a personal experience

No claim to be the best expert

Many people, many (contradictory) opinions

Bias given academic, professional, and personal

history A 1-year old opinion of a changing industry

Goals

Providing an overview ofrecruitment process

Detailing necessary stepsto complete before andduring application

Giving training methodsand interview tips basedon my experience

Introduce you to case

cracking analysis


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Pre-interview preparation


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Networking1

CV2

Cover letter3

Useful reading and materials4


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Networking: most important step before applyingto consulting

Why?

What?

How?

Results

1

Most efficient way to skip CV scanning

Compulsory step to any application

(cover letter) Give you access to in-depth consultants

experience and insights

Send emails with multiple questions

Receiver usually suggest that youcall him

Discuss with consultants & gettheir card

1 to 1 relationship:

Friends / acquaintances

Alumni: Ms Strategic Management/former school

Forums / firm events / challenges

Lectures

Learn firm specificity (practice,life-style, etc)

Put your contact name on thecover letter

If possible have your CV dropped

Learn about recruitment process

Have a test interview !


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Establish personal relationships with members of the firm1

LinkedIn?

First contact

Email

Customize Leveraging common points (alumni, common friend, common

association, former company, etc)

Short, humble & polite

Basically asking many relevant questions on the firm

Talk/meeting

Phone call, forums & firm events

Be on time Be prepared (ask relevant questions again) Let the consultant talk about him: it is not about you Try to be pleasant & be smart!

Achievements

Cover letter materials (firm specificities & consultant name) CV dropping Learn about interview process Test interview

Next steps

Send a thank you message Keep your contact informed of your process progression

Maybe request another phone call


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Consulting oriented CV2

CV tailored to consulting

Display your goal: full-time/internship at a consulting firm

Quote strategy & related academiclectures

Select consulting or similarexperiences

Consulting

Investment banking Strategy challenges

Fact based & numerical

Perfect language & layout

Will be very useful for you duringinterviews


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Cover letter: a necessary step to get interviewed(and then useless)

3

Goal

CV vs. Cover letter

Format

Story telling

Create a successful package tosucceed application scanning

Usually more than 25 applicationsper position: better be above theaverage

All the more important than yourresume is not mind-blowing

Need to be customized:

30% re-writing for each application

Not a narrative CV

1 page, no more

Perfect language & layout

Professional Easy to read, consistent and not

so boring

English / French

Your application must seem to be thenatural consequence of your life

Opportunity to bring non CVexperiences


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Cover letter: bragging 1013

Why are you interested bythe company ?

Why are you interested bythe job?

You

Why are you a good fit forthe position ?

Academic Professional Extra - professional

Me

Next steps ? Call, interviewUs


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Cover letter: You (why do you want to do this job?)3

Why consulting? Multiple sectors (sales,

marketing, production,strategy, etc)

Multiple domains (industry,services, finance) Multiple companies International High level issues High impact

Change implementation Interactions with important

clients Steep learning curve Intellectually challenging

Nice colleagues Etc Don't mention the money

I am attracted to consultingsince it would allow me to workon diversified strategic corporateissues across multiple

companies and many industries.It would give me the opportunityto study deeply each side ofthese problems and have a trueimpact on their resolution.

I would thus evolve amongsmart consultants teams,hopefully quickly assumeresponsibilities and be in contactwith top management clients. Iam also very concerned by the

steep learning curve of the job.


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Cover letter: You (why do you want to go to this firm?)3

Why the firm ?

Specificity vs. competition: Practices / Growth

International scope / Size

Life-balance / Workingmethods

Famous for ?

Others

Quote the people you know

& be sure they know you Quote the firm eventsyou attended

Show your knowledge of the firm,that you have done yourhomework

Consistency: link what you areseeking in the firm / job to yourexperiences / strengths

I would like to express my deep interest inMcKinsey and inquire about your juniorposition at the Paris office at the end of myultimate year of graduate studies in Ecole

Polytechnique and HEC (June 2013). I amspecifically attracted to McKinsey by itsoutstanding worldwide reputation,leadership and top clients portfolio.

I am also very enticed by your

entrepreneurial spirit (as I heard of thebuilding your own McKinsey state ofmind). I have talked with employees of thefirm Mrs. XXXX, Mr. XXXX, Mr. XXXX andXXXX especially, as they are alumni of myschool. Their description of your firm

culture, its coaching environment, veryteamwork-oriented, gathering peopleconstantly looking for improvement and itstruly international scope raised myenthusiasm.


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Cover letter: Me (why are you such a good fit for the firm?)3

My training at Ecole Polytechnique with aconcentration on finance and economicshas provided me with a strong analyticaland quantitative background. The Strategic

Management master I attended in HEC thisyear confirmed my taste for consultingthrough strategy courses and weeklyworkshops with consultants.

As I wanted to get a strong financial

training before applying to consulting, Imade an internship at the Goldman Sachs(Paris, 2012) in the M&A department. As Itook part especially into a buy-sideadvising and bonds emission I becamefamiliar with valuation methods and

financial modeling. This experience taughtme some of the basics of consultingetc

Basically bragging 101

Consulting firms are lookingfor:

High academic

achievements Strong analytical &

quantitative profiles

International experiences Leadership

Could need somecustomization:

Depends on some firmsrequirements (especiallysmall and specialized

firms)


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Reading and materials5

Books

Interviewcollections

Ace your case

Websites

Caseinterview.com Useful tips and videos of interviews

Vault.com

More or less useful information about consulting firms

Consultor.fr News about the French consulting sector

Press?


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Consulting firm recruitmentprocess


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Timing

Full-time vs. Internship?

Decision process

Insights

Process

1

2

3

4

5


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Recruitment process1

Internships: beware

of deadlines

For a few firms

only Either physical

or on the phone

Could be at theend

Maths/logical

tests Several rounds

of interviewswith consultant

Application (HR interview) Interview rounds Job offer

Free lunch

Negotiation (~)


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When to apply ?

Quotas

Officially consulting firms hire as soon asyou proved to be part of their target level

But they still have maximum quotas

Do notwait for

Workshops with consultants

Strategic lectures

Company project

Timing

HR services not so quick to react

Recruitment processes: up to 4 rounds:very long & time consuming

Need to go through some non-targetconsulting firm processes beforeinterviewing with your targeted companies

1


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Applications

2013 2014

Oct Nov Dec Jan Feb Mar Apr MayActivities

Target-firms interviews

Networking

Non-target firms interviews

Case cracking training

Application

Cover letter

CV

1


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Applying for a full-time or an internship?

Your previous experience: significant

consulting experience is enough

Academic, professional and extraprofessional leverageableachievements

Are you risk adverse?

Are you sure you want todo consulting?

Are you in such a hurry?

Exactly the same job but higher

wage for a full-time

Internship is not always consideredas firm experience regardingpromotions

Slightly higher expectations fromthe firm for a full time

Getting a full time is tougher thangetting an internship

When can you apply for a full-time?Pro & cons

2

If you are going in for a full-time: hedge your risk (with firms not hiring full-time for e.g.)


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Next round decision process3

Next round decision process:

Each interviewer will issue an opinion: Yes: he would like to work with you

Maybe: the interviewer has some concerns aboutyou, that will be tested during next rounds

No: one no will end your process

Final decision is taken on the basis of all theinterviews

Once eliminated from a firm process, you cannotapply before 2 years usually (or more)


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Applications: a few insights4

French consulting firms hiring policy regarding non-native French speakers:

Interaction with clients: need to speak perfect FrenchBetter to apply in your home country

Students coming from non-target schools:HEC Ms Strategic Management label maybe not enough

to go through CV scanning automatically

Nonetheless not an obstacle if you get recommended Tips to get a quicker answer from HR and/or accelerate

process:Tell them you are well under way at others firms (or at

least pretend to be) On the other hand, do not hesitate to postpone if you

are not ready!


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Firm specificities5

3 rounds (including onecollective case crackinganalysis for internship) with

up to 2 interviews per round

No HR interview

Partner at the last round

3 rounds, with up to2 interviews per round

HR interview

Only market sizing cases,pretty straightforward, butdone alone (the consultantwill leave you 10 minutesand then ask you to presentyour findings)

3 rounds with up to 2interviews per round

HR interview

2 rounds (internship, full-time?), with 2 interviews perround

English test (first Englishcase on the phone withWall Street English Instituteand then summaryexercise), first round

No HR interview

3 rounds (2 for internship),with 2 interviews perround

Numerical & reasoningtest: medium, 1st round

No HR interview

2nd round: written case

2 rounds, with 2interviews per round

No HR interview (?)

3 rounds with 2 interviewsper round

No HR interview, but last

interview with Paris headoffice (without case)

3 to 4 rounds (2 forinternship), with up to 3interviews per round

Numerical & reasoningtest: challenging, 1st round

End HR interview forinternship

1st round with a partner


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Consulting interviews:numerical tests andmotivation step


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Numerical and reasoning tests

Motivation and personality

1

2


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Consulting interviews: numerical & reasoning tests1

How to train?

Practice McKinsey PST test: 4 tests available on their website with detailed corrections Practice GMAT test

Needless to say:

Be sure you know your multiplication tables Be sure you know how to do divisions

Be sure you are perfectly comfortable with basic arithmetic (inequalities, quadratic expressions and Taylor formulas) Do the right approximations

10 to 20 minutes before a test / interview

Remember all these tips Do some basic calculations as a warm-up

Constantly manage your time

Quadratic expressions Taylor formulas (for x~o)

2 1 1 1

2 2

2 1

1 1 2

1

1 1 2

Basic divisions

1/1 1,00

1/2 0,50

1/3 0,33

1/4 0,25

1/5 0,20

1/6 0,17

1/7 0,14

1/8 0,12

1/9 0,11

1/10 0,1010

10

10

;

10

10 10


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Consulting interviews

Consulting interview takes place in twosteps:

Motivation and personality

Case cracking

Language: either completely in French,English or both


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Goal

Consulting interviews: motivation and personality (1/2)2

The goal of the motivation step is to assess the match betweenyour profile, motivation and the firm values:

Why do you want to do consulting? Why in this firm in particular? Why would you be a good fit for the firm?

And to assess the following:

Are you ready to handle senior client interaction?

Are you a good team-worker? Is it pleasant to work with you? Are you a leader? Do you take initiatives? Do you have good communication skills? Can you show creativity?


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Consulting interviews: motivation and personality (2/2)2

Goal

Interview step progress will depend of the interviewer:

Some will just ask "Tell me more about you and why you are there?" Some will be very specific and ask very accurate questions

Before D-day develop some story telling (cf. cover letter) about you tobe able to answer broad questions

Concise Organized (chronological?):

Professional

Academic

Extra-professional Not a narrative story What are the key takeaways of these experiences How are they relevant from a consulting point of view?

Miscellaneous questions:

3 qualities / 3 faults

Last movie seen / book read Where else are you applying to? Where do you see yourself in 5 years? Give an example where you over achieved under pressure /

convinced a hostile group of people to your / took the lead


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Consulting interviews:case cracking


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What is a case?

Method

FrameworkUseful tools

Progress and end of the case

1

2

34

5


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What is a case1

A case: a business question

On a topic you have no knowledge about

To be answered through a dialogue withthe interviewer

Definition

Assessing The way you structure your thoughts

Your reasoning

Your listening skills

How you handle pressure

Goal


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Method: first approach2

Case question1

Summarize the question2

Verify the objectives (and look for hidden ones)3

(Quick questions)4

Setup a framework5

Solve the case6


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2

Case question

Initial dataQuestion(s)Case objective(s)

Data

1

2

3

4

5

Revenues

Costs

Price

Volume

Variable

Fixed

A

B

C

D

E

F

G

H

I

J

Number your sheets Do your calculations on a separated sheet and number them

Highlight the key data and metrics

Method: structure your case, structure your thoughts,structure your workspace


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Frameworks3

Developing a new product

Entering a new market

M&AProfitability

Useful tools

1

2

34

5


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1 Frameworks: developing a new product1

1 Freely inspired from Cosentino's

Product

Advantage/disadvantages

Proprietary/patentedProduct

Substitutes/differentiation from competition

Whats special or proprietary about our product?

Is the product patented?

Are there similar products out there? Are theresubstitutions?

What are the advantages and disadvantagesof this new product?

How does the new product fit in with the rest of ourproduct line?

Customers

Who? Segmentation

How to reach them/retain them

Price willing to pay

Custo-mers

Who are our customers?

How can we best reach them?

Can we reach them through the Internet?

How can we ensure that we retain them?

Marketstrategy

Cannibalization / image problem

Effect on sales

Competition response/competitionsituation: market shares

Marketstrategy

Are we cannibalizing one of our existing products?

Are we replacing an existing product?

How will this expand our customer base andincrease our sales?

What will the competitive response be?

If its a new market, what are the barriers to enteringthis market?

Who are the major players and how much market

share does each firm have?

Financing

Profitability? Break even (in % of totalmkt.?)

How to finance it ?

Finan-cing

How is the project being funded?

What is the best allocation of funds?

Can we support the debt? (What if interest rateschange? What if the economy sours?)

1

2

3

4


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Frameworks: entering a new market12


Why? Goals? Objectives?

Profitability

Entering

Yes

No

M&A

Joint venture

Joint venture

AnalysisHow toenter themarket?

Start from scratch

Acquire an existing player within the desired industry.

Form a joint venture/strategic alliance with another player withsimilar interests

Major players, market share,dynamics, strengths andweaknesses

Product differentiation

Barriers to entry

Competition

Competition

Enter themarket?

Who is our competition & what are its market shares?

How do their products and services differ from ours?

How will we price our products or services?

Are there substitutions available?

Are there any barriers to entry? Are there any barriers toexit? How do we exit if his market sours?

What are the risks? For example, market regulation ortechnology

Size

Newmarket

Growth rate

Customer segmentation

Newmarket

What is the size of the market?

What is the growth rate?

Where is the company in its life cycle? (Emerging? Mature?Declining?)

Who are the customers and how are they segmented?

What role does technology play in industry? How will thecompetition respond?

1

2

3

4


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3 Frameworks: M&A1


Objectiveswhy buy

Market access

Diversity holdings

Taxes

Pre-empt competition

Synergies

Shareholder value

Boost brand

Increasemarket share

Cost savings

Culturalintegration

Distributionchannelexpansion

Reduction offixedand variablecosts

1

Fair price? Is it profitable?

Can we afford it? How to pay for it

What if the economy sours?

Reintegration costs

Acquisitioncosts

2

What shape is the economy in?

A market leader?

Industry overall technology risks

How secure are markets, their customers and suppliers

MarginsCompetitive response

Duediligence/Risks

3

Exitstrategy

Hold for how long?

Break it up and sell off its parts4

Whymerging?

Increase market access

Diversify their holdings

Pre-empt the competition

Gain tax advantages

Incorporate synergies: marketing, financial,operations.

Create shareholder value

Duediligence

What kind of shape is the company in?

How secure are its markets, customers andsuppliers?

How is the industry doing overall? And howis this company doing compared to theindustry? re they a leader in the field?

What are the margins like? Are they high-volume, low-margin, or low-volume, high-

margin? How will our competitors respond to this

acquisition?

Are there any legal reasons why we cannot,or should not, acquire it? off parts of it?

Price

Is the price fair?

How are they going to pay for it?

Can they afford it?

It the economy sours, can they still maketheir debt payments?

Exit

How long are they planning to keep it?

Did they buy it to break it up and sell offparts of it?


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3 Frameworks: Profitability4

Profits

Revenues

Costs

Revenues / unit

Number of units sold

Cost

/unit

Number

of unitssold

Fixed cost

Variablecost

E (P=R-C)

Top down approach: determine if the issue comes from:

The Environment (10%): E The firm itslef (90%): P = R - C

Segment the numbers

Compare to historical metrics to find the issue Compare to competition

Tips:

1)

2) 3)

Segmentation

Revenues possible segmentations:

Product / product line Distribution channel Geography Customer type (new/old, big/small) Etc

Costs possible segmentations:

Logical components

Value chain Etc Use the force:

Key success factor: business sense Know when to follow the framework (methodical approach), and

when to trust your intuition


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4 Useful tools: Porters five forces (Cheng1's version)

1 www.caseinterview.com

Who is the customer?

Identify segments (segment size, growth rate, % of total market) Compare current year metrics to historical metrics (look for trends)

What does each customer segment want? identify keys needs

What price is each segment willing to pay? determine price points and price elasticity/sensitivity

Distribution channel preference for each segment

Customer concentration and power (does one customer control all the demand, the Wal-Mart effect)

Customer

Nature of product (benefits, why someone would buy it?)

Commodity good or easily differentiable goods (could company increase differentiation?)

Identify complimentary goods (can we piggy bank off growth in compliments or near compliments?)

Identify substitutes (are we vulnerable to indirect competitors namely substitutes?)

Determine products lifecycle (new vs. almost obsolete)

Packaging (optional) whats bundled, included (ex. Razor vs. razor blades, with w/o service contract

Product

Capabilities and expertise

Distribution channels used

Cost structure (mainly fixed vs. variable High fixed cost = barrier to entry compare to industry, often insightful)

Investment cost (optional: only if case involves an investment decision)

Intangibles (e.g., brands, brand loyalty)

Financial situation

Company

Competitor concentration and structure (monopoly, oligopoly, competitive, market share concentration)

Competitors behaviors (target customer segments, products, pricing strategy, distribution strategy, brand loyalty)

Best practices (are they doing things we are not?)

Barriers to entry

Supplier concentration

Industry regulatory environment

Life-cycle of industry

Competition

5


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3 Progress and end of the case

Watch the clock:

Since you have to lead, you are the one in charge of timing Do not stay stuck on a very specific issue of the framework

Step back each time you reach a milestone:

Quickly sum up your findings before going on (partial conclusion) Try to find if you exhaustively treated the issue

Find the right balance between:

Taking a lot of initiatives (setting all the hypothesis, choosing the casestructure completely on your own)

Asking directions (which branch of the issue tree should I dig into first,confirmation of your findingsetc)

This balance depends of the case and the interviewer:

Listen very carefully to what he/she says Decipher the body language, play mind-reading


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3 Progress and end of the case

End of the case: elevator pitch

The CEO just passed by

can you sum up your approach and findings in 30 seconds?

Don't be surprised:

When you feel this is the end of your case prepare yourself

Organize your notes all along the case accordingly (cf. partial conclusion)

Take a deep breath and structure your answer

"The answer is"

"I cannot answer because"

Summarize the case, not the last 25%...

Give an answer to the initial question

Grand final: last spike of energy, structure and brightness !


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