Acing the Case

Interview
MIT Careers Office
Room 12-170

Agenda
Introductions
Business Case Interview Overview
Types of Cases
Frameworks
Example Case
Case Interview Tips
Case Practice in Groups
Questions
Source: Deloitte, 2005

Business Case Interview Overview

Q

What is a Business Case Interview?

A Business Case interview is an interactive experience where you will be

presented with a business problem / scenario and asked to work through the
solution based on the information available. The case interview is used to
evaluate how you think and how you approach a problem. There is typically no
right or wrong answer. A business case interview normally consists of a
challenging question with incomplete information. Sometimes, business case
interviews are based on actual client engagements.

"Remember that the best leaders never

stop learning."
Abraham Lincoln
Source: Deloitte, 2005

Objectives
Consulting Companies Use Business Case
Interviews to Assess:
1
2
3
4
5
6
7

Logical / analytical thought processes

Communication skills
Creativity
Business insights
Performance under pressure
General knowledge
Problem solving with incomplete information

Source: Deloitte, 2005

Types of Cases
1.

Market Sizing
Determine how big a particular problem is, or how many of X products are used.
Examples:
How many golf balls are made in the US each year?
How many cans of paint are needed to paint the Delta fleet?

2.

Brainteasers
Puzzles or questions that challenge a candidates ability to think creatively.
Examples:
Why are manhole covers round?
Why do fashions change every year or two?

3.

General Business
Typical general business cases include the following subjects:
Falling Profits, New Product Introduction, Entering a New Market, Where to
Locate a New Facility (Site Selection), Mergers and Acquisitions

Source: Deloitte, 2005

Market Sizing
How many new golf balls would be used in the US in a given year?

Possible Approach:
Number of golfers in the US

~ 50 million people
play golf in the US

250 million people in the US, 20% of

population plays golf
Number of balls they use per round
2 to 3 balls per round

~ 2 to 3 balls per
round

Number of rounds they play per year

Average of 10 rounds per year

~ 10 rounds per
year

~ 1.25 billion golf balls

Source: Deloitte, 2005

General Business
Best Buy has asked you to develop an expansion strategy

Possible Solutions:
Increase number of stores
Increase revenues within existing stores
Build new brands
Acquire competitor
Add products and services

Source: Deloitte, 2005

Use of Frameworks
Frameworks can help logically structure problem solving
Many different methodologies exist, for example:
Porters 5 Forces (Suppliers, New Entrants, Buyers/Customers,
Threat of Substitutes, Industry Competitors)
S.W.O.T. (Strengths/Weaknesses, Opportunities/Threats)
4 Cs (Customer, Costs, Competitors, Capabilities)
4 Ps (Price, Promotion, Place, Product)
Dont blindly follow a framework! Choose a framework based on the
problem you are solving, and use the framework to organize your
business case analysis
It is better to not apply a framework if you are unsure of how to use it.
You dont need to use a framework as long as your response is well
structured and your solution is sound
Source: Deloitte, 2005

Framework: Porters Five Forces

Porters Five Forces is useful for understanding the competitive intensity and
overall attractiveness of an industry.

Force

Description

Barriers to Entry

Threat of new entrants

entering the market and
stealing share from existing
competitors

Threat of Substitutes

Threat of substitute products

and services stealing share
from existing competitors

Industry Competition

Rivalry among existing

competitors

Buyer Power

Bargaining power of
customers

Supplier Power

Leverage of suppliers over

buyers

Source: Deloitte, 2005

Framework: S.W.O.T. Analysis

The S.W.O.T. analysis is a useful framework for understanding a companys core
competencies and shortcomings at a high level.

Strengths
Sustainable distinctive competitive
competency
Acknowledged market leader
Adequate financial resources
Cost advantages
Management assets

Opportunities
Likelihood of entrance of new
competitors
Changing consumer trends
Economic upturn
Changes in government regulation
New technologies

Threats

Weaknesses
Obsolete facilities, products or
services
High debt, low equity
Lack of management depth
Too narrow (or wide) product line
Myopic promotion strategy

Source: Deloitte, 2005

Market saturation
Inflation or recession
Threat of national security
Natural disaster
Trade restrictions

Framework: The Four Cs

The Four Cs are a useful tool for understanding retail and sales oriented
cases as well as for analyzing new product introductions.

Customers (Examples)

Demographics
Purchasing Criteria
Sales and go to market strategy
Segmentation

Competitors (Examples)

Competitive Advantage
Market Share
Perceived Value
Price

Source: Deloitte, 2005

Costs (Examples)
Economies of Scale
Inventory and other holding
costs
Labor
Leverage over suppliers

Capabilities (Examples)
Acquisition of Raw Materials
Production Strategy
Organizational Strategy

Framework: The Four Ps

The Four Ps are a useful tool for understanding marketing problems.

Product
Important Product Attributes
Selection Criteria
Value added

Promotion
Advertising
Discounting
Incentive Programs

Source: Deloitte, 2005

Price
Predatory Pricing
At Market Pricing
Premium Pricing

Place
Distribution Strategy
Location
Organizational Strategy

Approach for Solving a Business Case

Study
Use this 5 step approach for solving a business case study:
Understand
the problem
As the case is
being
presented, the
interviewee
should write
down key facts.

Source: Deloitte, 2005

Obtain more
information
The interviewee
will need to ask
questions in
order to gain
clarity and
insight into the
problem.

Apply
Frameworks
As more
questions are
asked, it can be
helpful to
structure
thoughts in an
appropriate
framework.

Present
Conclusion

Recommend

After all of the

information
has been
analyzed, the
interviewee
should develop
and present a
conclusion.

Once the
conclusion has
been made, the
interviewee
should offer a
recommendation
and present their
insights.

Cracking the Case

Listen and understand the business case situation

Determine your structure up front
Communicate to the interviewer the issues you plan to evaluate
If the Interviewer redirects you, dont fight them they may be trying to
pull you back on track
Perform the appropriate calculations
Ask questions that support or refine your framework
Check your progress
Wrap it up!
> Based on the facts you have gathered, draw a
conclusion that answers the interviewers question
> Be prepared to wrap it up even if you run out of
time

Source: Deloitte, 2005

Example Business Case - Background

Client:
Drug Co, a major North American Drug / Convenience store has been
losing market share for three years. They have asked us to determine
the cause for this trend and to recommend solutions to regain market
share.
Background:
Drug Co has 3000 stores in metro, suburban, and rural areas. Along
with prescription drugs, Drug Co sells food and beverages, and health
and beauty aides.
Financial Snap Shot:
Over the past three years Drug Co sales have increased at a
compound annual growth rate of 3%. During that same period, market
share has declined from 10% to 5%.
Source: Deloitte, 2005

Step 1: Understand the Problem

As the interviewer presents the case, you should write down key facts. You
will need to recall these facts later on in the case study.

Client: Major Drug Retailer (Drug Co)

Locations: 3000 Stores in metro, suburban, and rural areas
Products: Prescription drugs, food and beverages and health and
beauty aides
Financial: 3% Growth in sales 50% decline in market share
Objective: To determine why market share has declined and to offer a
recommendation on how to reverse this trend

Source: Deloitte, 2005

Step 2: Ask Questions and obtain more

information
In order to solve the case, you will need to ask questions which will add
clarity and structure to the problem.

Financial: 3% Growth in sales and a 50% decline in market share

What does the industry growth outlook look like
What are the competitive characteristics of the industry
Products: Prescription drugs, food and beverages, and health
and beauty aides
What is breakdown of Drug Cos revenue by product
Which products have the highest and lowest growth
Locations: 3000 Stores in metro, suburban, and rural areas
What is Drug Cos geographic foot print
Where has Drug Co experienced the greatest growth

Source: Deloitte, 2005

Step 2: Ask Questions and obtain more

information
Some cases will present qualitative as well as quantitative information.
Over the past 3 years, the retail drug store industry has experienced a CAGR* of 7%. This growth
has been fueled by:
More price sensitive consumers
Discounting and other loyalty programs
Growth in certain geographic segments
There are three types of competitors:
National Drug Store Chains, e.g., CVS
National Discount Chains, e.g., Wal-Mart
Online Drug Store
Drug Co Revenue & Growth by Product
%
Revenue

Product

CAGR Last 3
Years

Prescription Drugs

20%

11%

Health and Beauty

Aides

50%

1%

Food and
Beverages

30%

Source: Deloitte, 2005

1%

* CAGR is the average annual growth rate

Drug Co Revenue & Growth by Region

Region

%
Revenue

CAGR Last 3
Years

Metro Area

40%

2%

Suburbs

20%

7%

Rural Area

40%

2%

Step 3 Apply Frameworks

As you think of questions it is important to structure your thoughts by applying an
appropriate framework that you are comfortable using.
The Four Ps
Drug Co Revenue & Growth by Product
%
Revenue

CAGR Last
3 Years

Prescription
Drugs

20%

11%

Health and
Beauty Aides

50%

1%

Food and
Beverages

30%

Product

How do prices differ from

competitors
What kind of promotional incentives
exist, e.g., loyalty programs,
discounts
How are products distributed to the
stores within the different regions
How important are cost and
convenience to consumers

1%

Porters Five Forces

Drug Co Revenue & Growth by Region

%
Revenue

CAGR Last
3 Years

Metro Area

40%

2%

Suburbs

20%

7%

Rural Area

40%

2%

Region

Source: Deloitte, 2005

What are the barriers to expanding

in each geographic region
What is the threat of substitutes
from online stores such as
drugstore.com
What is the rivalry between
existing firms in each market
How much choice do consumers
have in where to shop
What is Drug Cos relationship with
its suppliers

Step 3 Apply Frameworks - Continued

The Four Ps is a useful framework to apply when analyzing the marketing
effectiveness of a companys product.
The Four Ps
Offerings

Prescription Drugs

Health and Beauty

Aides

Price

Premium pricing. Prices

typically 20% higher than
market

Promotion

Free personal
No promotion or loyalty No promotion or loyalty
consultations with
program for consumers program for consumers
pharmacist
Meant to be a follow on Meant to be a follow on
sale after customer has sale after customer has
Prescription database
filled prescription order
filled prescription order
which allows a customer
to pick up a prescription in
any store

Place

#7 buyer of prescription
drugs
Relationships with all of
the major drug producers

Tier 2 status with

Tier 2 status with
consumer products
consumer products
companies
companies
Quantity discounts with Quantity discounts with
vendors less frequent
vendors less frequent

Product

Customers value the

ability to purchase
prescriptions at one
location

Customers value price

and availability of
desired products

Source: Deloitte, 2005

Market pricing. Prices

typically 10% higher
than discounters

Food and Beverages

Market pricing. Prices
typically 20% higher
than discounters

Customers value price

Step 3 Apply Frameworks - Continued

Porters Five Forces is a useful framework to apply when assessing the attractiveness
of a certain customer segment or channel.
Porters Five Forces
Region

Metro Area

Suburbs

Rural

Barriers to Entry

High real-estate costs

Lack of space for prime
locations

Threat of Substitutes

Online drug stores and

Online drug stores and
grocers are widely used
grocers moderately used
and are taking away share
from traditional brick and
mortar stores

Industry Competition

Intense. There is a drug

store on every corner

Buyer Power

Buyer can buy similar

Buyer has a some options
products in many different
within a particular region.
stores
Choice often made based
on proximity to home

Buyers have few options to

choose where to shop
Buyers constrained by
budgets

Supplier Power

Suppliers are global

pharmaceuticals and
consumers goods
companies

Suppliers are global

pharmaceuticals and
consumer goods
companies

Source: Deloitte, 2005

Moderate real-estate costs Building awareness

Prime locations available in Lack of high foot traffic
sprawling communities
areas
Online drug stores and
grocers moderately used

Territorial. Stores serve a

Biggest threat from
particular geographic niche
discounters such as Target
and Wal-Mart

Suppliers are global

pharmaceuticals and
consumer goods
companies

Step 4 Present Conclusion

Use your analysis to develop a conclusion.
Drug Co is losing market share for two principle reasons
Incorrect geographic footprint
Incorrect product strategy

Problems with Drug Cos current footprint

Losing share from online drug stores in the metro areas
Losing share from discount stores in the rural areas
Not capturing growth opportunities in the suburbs

Problems with Drug Cos product strategy

Too little emphasis on selling prescription drugs
Lack of customer loyalty program for health and beauty aides and food and
beverages

Source: Deloitte, 2005

Step 5 Structure Recommendation

Present a well-structured and comprehensive recommendation.
What Drug Co should do to improve market share
Concentrate on expanding in suburban areas
Sell more prescription drugs

Why Drug Co should expand in suburbs

Moderate to low real-estate costs
Low penetration from online drug stores and discounters
Strong growth opportunities and prime locations available in developing
suburbs

Why Drug Co should sell more prescription drugs

Prescription drugs were the highest growth products for Drug Co
Build brand identity as the leading provider of prescription drugs in order to
reinforce customer loyalty program

Source: Deloitte, 2005

Case Interview Tips

Preparation
Practice! Grab a friend and practice some cases with him/her
Wet Feet Press and The Vault have good practice cases on their web sites
Check out Case Interview Resources tip-sheet from the MIT Careers Office
Contact alumni in the Consulting field for insider tips
Bring paper and pencil to the Business Case Interview
Execution
Relax. The interviewer wants you to succeed as much as you do.
Maintain your composure. Pretend you are having a conversation rather
than an interview
Dont jump to an answer. Take your time and explain how you arrived at
your answer
Ask questions, but if you need to make an assumption, state it and move on

Source: Deloitte, 2005

Things NOT To Do In A Case

Panic or become emotional

Guess
Ramble
Say I have no idea
Change the subject or lose focus
Make the problem more complicated
Jump to conclusions

Source: Deloitte, 2005