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The objective of a case interview is to recreate the conditions you will face in a real
consulting project so that your interviewer can get an idea of how you will perform
on the job. Case interviews have been used since McKinsey has been created in
1926 and really look like they are here to stay!
Here are a few typical examples of case interviews you could come across in your
consulting interviews:
"Your client is Coca-Cola, and their profits have been declining in recent years.
Can you help find the root-cause of the profit decline and turn the situation
around?"
"Your client is Nike, and it wants to launch a new line of sneakers in Europe. How
would you go about advising the CEO what new product to launch?"
Now that you know what case interviews are used for, let’s turn our attention to the
intensity of the competition to get into top consulting firms.
This might sound a little bit intimidating at this stage, but don’t worry. The purpose
of this case interview guide, is to prepare you to break into consulting and be part
of this 1%. It's actually more feasible than it looks like at this stage so keep reading
:)
In our experience, the first step to beat the odds and get an offer in consulting is to
understand what skills consulting firms are actually looking for. Once you
understand that, you can then signal you have these skills in your interviews.
It’s important to keep these four skills in mind because consulting firms will grade
you along these dimensions at each step of their recruiting process. Top firms
typically use four tools to make their assessment:
In the graph below we have mapped how recruiting firms use these different tools
in their recruiting process to test you along the four dimensions we have laid out
above.
The first step of the recruiting process is the resume and cover letter screening.
During that step consultancies will analyse whether you are showing promising
signs across all four dimensions they care about.
If you do, they will then invite you to take a maths and logic test. For instance,
McKinsey uses the McKinsey Problem Solving Test and BCG uses the BCG Potential
Test. Not all firms use such tests but most of them do. The objective of this step is
to analyse whether you meet a minimum threshold in problem solving skills.
If you pass that second hurdle, you will then be invited to interviews. During these
interviews you will need to answer two types of questions: case interview
questions, and behavioural interview question.
As mentioned above, case interview questions test your ability to solve tough
business problems your interviewer will have come across in the past. But they also
Finally, your interviewers will also ask you behavioural interview questions such as
“Tell me about a time you lead a team”, or “Tell me about a time you had a strong
personal impact on a situation”. These questions aim at testing your personal
impact, entrepreneurship and leadership skills.
Now that you know what skills you will need to demonstrate during the recruiting
process, let’s turn our attention to how exactly consulting firms make their hiring
decisions.
Both rounds of interviews will involve case questions and behavioural interview
questions. In each round of interviews you will meet 2 to 5 interviewers. So in total,
you will have between 5 and 10 interviews before getting an offer.
The candidates who prepare with us often ask if the second round of interviews is
different to the first one. The answer is that it’s not in terms of format. But the
people interviewing you will be different.
First round interviewers are typically junior or senior managers with 3 to 5 years of
experience. But second round interviewers are usually partners of the firm and
therefore much more senior.
At the end of the process, all your interviewers will get together in a room and
make a decision about your application. Partners are typically more outspoken than
managers. And your performance in the second round will therefore end up being
more important than in your first round.
So how can you make sure you impress both managers in the first round of
interviews as well as partners in the second round? Read the second part of this
guide to find out!
This might sound a little bit intimidating at first, but consistently cracking case
interview questions is definitely possible. Here is how: the key to consistency is
to always use the same step-by-step approach to answer them.
Indeed, if you improvise a new way of answering questions for every interview, at
some point you will get unlucky and underperform in one of your interviews.
Unfortunately, this could cost you the job given consulting interviews are so
competitive.
But if you develop a robust and consistent method to answer case questions, and if
you always use that method, then cracking interview questions will become a habit.
Consistency should therefore really be your objective as you prepare for cases.
But eventually, after you have repeated the same movements over and over again,
driving becomes second nature. After a while you don’t even think you are driving
anymore. You can drive, plan your weekend and listen to the radio all at the same
time.
So the question is how do you get to the same place for case interviews?
Situation
Framework development
Framework exploration
Quantitative question - Data provided
This is what we have been teaching in our McKinsey Case Interview Training
Programme and our BCG & Bain Case Interview Training Programme over the past
few years. And this approach has yielded extremely strong results: more than 80%
of people who have used it so far got an offer at their target firm.
So let’s dive in and try to understand what each of these 7 types of questions is
exactly.
2.2.1 Situation
As mentioned in the first part of this guide, the objective of case interviews is for
you to solve a business problem. At the start of consulting interviews, interviewers
will therefore layout the situation of the company you are trying to help. Your job in
that part of the interview will be to make sure you understand the situation
correctly by listening carefully and asking the right follow up questions.
Your client is a car manufacturer whose profits have been going down. The
CEO hired you to help turn the situation around.
In this example, you might want to confirm by how much profits have been
declining and since when. Have they been declining at 1% per year for the past 5
years, or is it a recent and sudden 20% drop? In addition, you could also be asking
what the CEO’s objective is. Is she aiming to just stop the profit decline or does she
want to reverse the trend?
The answer to these questions will significantly influence how to solve the case.
This part of the case interview aims to test your listening skills and whether you are
taking the time to make sure you understand a problem before trying to solve it.
What are the different areas you would look at to identify the cause of
declining profits and turn the situation around?
For instance, in the car manufacturer example, your framework could have one
branch on revenues and one branch on costs. Indeed, profits will have gone down
either because revenues have decreased, or because costs have gone up, or
because of both. And you need to look at both sides of the equation for your
analysis to be comprehensive.
You should therefore focus your energy on learning to develop your own
frameworks using the information you have gathered from your interviewer when
talking about the situation as well as your experience from past case interviews.
This might sound a little bit intimidating at first but becomes easy with practice.
How to create good frameworks is one of the many things we teach in our case
interview training programmes. You can read more about our point of view on
frameworks in the following blog post: case interview frameworks – a
comprehensive guide.
Can you explore your framework to find the root-cause of the profits issue
faced by the company?
This part of the case interview aims to test whether you are able to find the root-
cause of an issue in a structured way. The best method you can use in this situation
is to explore your framework using a hypothesis-led approach.
For instance, you might start by saying: “My initial hypothesis is that the profits
issue faced by the company is driven by revenues”. You would then investigate the
revenue side of your framework to identify if that’s where the root-cause of the
issue is. If revenues have been stable and are not the cause of the issue, you would
then update your hypothesis and move on to the cost side.
For an example of how to use a hypothesis in case interviews you can watch the
BCG & Bain live case interview extract video we have listed below.
The first one is questions where you will be provided with data. This data usually
comes in the form of graphs and tables or can also be provided by your interviewer
orally.
Data provided: table with volume and price for top cars sold by company
What do you think is going with revenues based on the data available in this
table?
Could you estimate the market size for cars in the US making assumptions?
Now that we know that the profit decline is driven by a decrease in number of
SUVs sold, what are some of the ideas you have to turn the situation around?
The CEO of car manufacturer gives you a call and asks you for your final
recommendation. What would you say?
For instance, your recommendation might be that your client launches new
products to improve revenues and therefore solve the profits issue it is currently
facing.
Now that you know what type of questions you will come across in case interviews,
you need to know that there are important differences between McKinsey cases
and cases at other firms such BCG and Bain.
Let's dive in and explore the top 3 specificities for each type of case. The
paragraphs below are a summary. For more details you should read the following
two blog posts:
First, during McKinsey cases, you will find that your interviewer is more active than
at other firms. Most of the time they will be leading you from one question to the
next and will also be challenging your results a bit more than at other companies.
They will control the pace of the interview and sometimes even interrupt you to go
to the next question. This is why McKinsey interviews are sometimes called
interviewer-led cases.
Third, as you probably guessed the bar to get into McKinsey is higher than at other
firms. This is why we insist so much on developing a consistent approach to solving
case interviews. This consistent approach will really make a difference by helping
you perform at a high level interview after interview.
Let's now turn out attention to case interviews at other firms than McKinsey. We
loosely refer to these firms as BCG and Bain. But in reality this applies to ALL other
consulting firms you could be applying for including for instance: LEK, Oliver
Wyman, Roland Berger, Deloitte, etc.
First, cases at BCG, Bain and other firms are often called “candidate-led” cases. This
is because you will be expected to play a much more proactive role in the
interviews at these firms than at McKinsey. Your interviewer will let you decide in
which direction to take the case. And they will only intervene if you are going
completely off-piste.
Third, while the flow of questions at McKinsey is pre-determined, this won't be the
case at other firms. Instead, the flow of questions is much more variable because
you are leading the case and the interviewer will therefore adapt their questions to
what you are doing and saying. You will still come across the seven types of
questions that we discussed in this guide, but their order might sometime be
slightly unconventional!
Each programme is tailored to master the specificities of the firms it targets. One of
the components of these programmes is live case interviews where you can watch
a best-in-class candidate solve cases. As mentioned previously, this is a great way to
train to solve cases by yourself using a consistent method. And remember, a
consistent method is really what will enable you to nail interview after interview :)
If you would like to get a feel for McKinsey interviews, as well BCG & Bain
interviews, you can watch the two extracts below. We hope you will find them
helpful.
To be clear, you don't need to become a maths Phd to crack case interviews. You
just need to be able to do basic maths extremely efficiently. Our advice is to
proceed in two steps here.
First if your maths are really rusty, you should review how to do basic operations
such as additions, subtractions, divisions and multiplications mentally. This might
sound very basic, but 80% of the maths mistakes people make are basic calculation
Second, you should spend some time learning slightly more advanced techniques
that can greatly increase the speed at which you do maths calculations. This
includes techniques such as how to apply growth rates over multiple years, or how
to factorise / expand maths expressions efficiently. The following blog post covers
some of these interview maths techniques. It is focused on the McKinsey PST but
applies to case interviews too.
As we mentioned in the second part of this guide, there are 7 different types of
questions in case interviews. In our experience, the best way to consistently crack
cases is to learn how to consistently crack each type of question in isolation first.
This makes the whole learning process much more manageable. It means you can
more easily measure your progress and focus your preparation on the areas of
consulting interviews you are less comfortable with. For each of the 7 question
types you should therefore develop a step-by-step method that you always use.
In addition, it can also be helpful to practice case interviews by yourself. This is one
of the top reasons people use our case interview training programmes. They
include live case interview videos which are structured so that you can listen to the
interviewer's question, hit pause, and answer the question as if you were in a real
interview. This is an extremely efficient way to progress quickly.
We recommend putting about 25% of your preparation time aside to prepare good
answers to common fit and PEI questions. We are currently working on adding a
section about this specific topic to this guide. In the meantime you should read this
blog post on frequent McKinsey PEI questions how to answer them.
Some races are worth the extra effort, so let's get started!
Our sample cases are based on past McKinsey, BCG and Bain case interviews to
ensure you train with the most realistic materials possible. Here are important facts
and tips to make the most of this Free Case Prep:
1. No calculator
If you are practicing by yourself, you should both play the role of the interviewer
and of the interviewee and you should speak out loud. This might sound a little odd
but candidates who force themselves to use this technique are progressing much
faster than others because it better reproduces the conditions of the interview.
Trust us, do it!
Interviews at McKinsey, BCG and Bain usually last between 45 and 60 minutes. The
personal experience part of the interview takes 25% of the time on average and the
case interview takes the remaining 75%. We therefore strongly advise you to
complete each of the following cases in 30 to 40 minutes.
After completing each case, you should study the answer key in details. You need to
pay attention both to the content of the answers and to the way it is communicated.
Most candidates are only focused on the content and whether they got to the right
answer. But in reality, your interviewer will also evaluate you on how you
communicate. Do not hesitate to repeat parts of the answer out loud. This will help
you develop a habit of communicating in a structured way.
Finally, do the cases multiple times. You might think that you will remember the
answers, but if you wait a couple of days you probably won’t remember them very
well. In our experience, it is better to do 20 cases and to learn a lot from them than
40 cases without spending time analysing the best way to answer them.
Doing cases a second time will enable you to keep track of your progress and to
double check that you are not making the same mistakes twice. We also
recommend that you keep a notebook where you write down what you've learned
at the end of each case. You can then refer back to it when you do a case for the
second time.
Finally, we are here to answer any of your questions, so if you get stuck trying to
understand the explanations in the answer key, just drop us a line
at: support@igotanoffer.com. We’ll be happy to fill any gaps!
1. Situation
Your client is Thailand Lottery. It is the only business allowed to organise a lottery in
the country. Despite this advantage, Thailand Lottery’s sales have been declining
over the past ten years as a result of the emergence of new competitors such as
online sports betting websites.
The CEO wants to increase sales by launching a new product and has hired your
team to help design an expansion plan. He is considering two options:
Start a transnational lottery with three other lottery organisations. This new
game could offer a larger jackpot than the lottery in individual countries, as
more people would play the same game.
Create a scratch cards product. Players would buy cards coated with an
opaque layer and scratch them to find out if they won a prize.
2. Framework
What areas would you investigate to determine which product Thailand Lottery
should start?
3. Quantitative questions
Question 3.a.
Your team assessed the purchase intentions of the Thai population for both scratch
cards and the transnational lottery. They asked the following question to a
representative sample: “Which of the following six options would you be most likely
to purchase?”
Each respondent answered the question both for scratch cards and lottery tickets.
What insights on customers’ preferences can you draw from the survey results?
Question 3.b.
After your initial analysis, the CEO has decided to focus on the transnational lottery.
He has held talks with the Philippines, Malaysia and Indonesia. They agreed, among
other things, on how sales and costs should be split between the four
organisations.
All tickets are to be sold at the same price in each country. For each ticket sold, the
national lotteries contribute a fixed amount per ticket to the jackpot. This jackpot is
then equally shared between the draw’s winners.
Item Value
Price of one ticket $3
Variable costs in Thailand (excluding jackpot) $0.2 / ticket
Fixed costs in Thailand (excluding jackpot) $20m / year
# Lottery draws / month 4
Thailand Lottery wants to achieve a minimum profit margin of 15% in the first year
of the transnational lottery. Is it feasible for the company to aim for a transnational
lottery with a jackpot of $20m (Option 6)?
4. Creativity question
The average age of Thailand Lottery’s customers has been growing from 35 years
old to 45 years old over the past decade. The CEO is worried that the new product
might not attract new young customers, and would therefore not significantly
increase revenues. How could the company halt or reverse the aging for their
customer base?
5. Conclusion
1. Situation
To avoid any misunderstandings, you should ask follow up questions that will help
you get a better grasp of the situation. For instance, you could ask:
I understand that the transnational lottery makes it possible to offer higher
jackpots. But how would the revenue from ticket sales be shared? I would
assume that 100% of ticket revenues generated in the Philippines would go
to the Philippines, is that right?
I understand that the CEO wants to launch only one new product. Is there
any particular reason why?
Prior to diving into the framework question, it is also advisable to further define the
objective of the case. Examples of questions you could ask include:
I understand the CEO wants to increase sales. Do we know by how much and
by when?
Are sales the only metric the CEO is interested in or is profitability important
to him too?
Asking clarification questions and defining the objective of the case at beginning
are essential steps to set you up for success. If you are not 100% clear on what the
objective of the case is you simply cannot get to the right answer.
This is something partners at McKinsey, BCG, Bain and other firms always do at
the beginning of projects to make sure they understand the problem they are
solving for their client inside out. Doing this might sound straight forward but it is
a critical part of any consulting project, and any case interview.
A. Revenue potential
1. Total market size
a. Customer demand: For each product, how many potential
customers are there? How fast is the customer demand for each
product growing over time?
b. Spending per customer: How much do we expect customers to
spend on each product every year? Is this spending per customer
expected to grow / shrink?
c. Distribution: What is the total market size by distribution
channel (online vs. physical)? How much of the revenue would be
captured by Thailand Lottery vs. its distributors?
2. Market share potential
a. Competitors: How many competitors also offer scratch cards?
What is the distribution of market shares between existing
competitors?
b. Customer satisfaction: Are the customers of competing
products satisfied with the existing offering?
c. Customer base overlap: For each new product, what is the
overlap with Thailand Lottery’s current customer base?
B. Regulation
1. Regulatory constraints: What are the regulatory constraints for each
product? To whom could the product be sold (e.g. age restrictions) and via
which distribution channels (e.g. online)?
2. Regulatory approvals: Would Thailand Lottery need any regulatory
approvals for the different products considered? How long would it take
to obtain these approvals?
3. Policymaker view: Do we know if Thailand’s policymakers are
favourable to an expansion of Thailand Lottery or if they are likely to try
to slow it down?
During your interviews you should draw your framework on a piece of paper and
present it to your interviewer. If they are sitting across from you, you could even
turn your piece of paper around so that it is easier for them to read. And you
could also point at the different parts of your framework with your pen as you
step through them.
Turning your piece of paper and pointing with your pen will help grabbing your
interviewer’s attention and it will show that you are a strong communicator which
is one of the skills consultancies look for in candidates.
3. Quantitative question
Question 3.a.
The survey question was: “Which of the following six options would you be most
likely to purchase?” Each respondent answered the question for both scratch cards
and lottery tickets. As a consequence, purchase intentions add up to 100% in each
table and the data therefore indicates customers’ preferences in terms of product
features (price, jackpot, chance of winning). However, it does not directly enable us
to say which product customers prefer.
Let’s first try to understand the correlations between purchase intentions and the
different product features:
For a given ticket or card price, purchase intentions are highest for the
alternative that offers the highest jackpot. Customers therefore seem to be
attracted by high jackpots. For instance, options 1 and 2 for scratch cards
In summary, purchase intentions are primarily driven by the jackpot and price
levels, not so much by the chances of winning.
Let’s now analyse which option performs best for each product:
For lottery tickets, the highest purchase intention is for the highest jackpot
option which is option 6. However, for scratch cards, the highest purchase
intention (option 4) is not for the highest jackpot. This could be due to the
fact that jackpots are lower for scratch cards and therefore the card price
could be a bigger driver of customer choice for this product.
The largest share of purchase intentions for lottery tickets is 43% (option 6),
which is more than 50% higher than the largest share of purchase intentions
for scratch cards (27% for option 4). This relatively high level of purchase
intentions reveals a very strong interest for option 6.
In conclusion, the data provided does not directly enable us to say if customers
prefer scratch cards or lottery tickets. However, it indicates that the transnational
lottery could be a good option to explore further for three reasons:
Option 6 for lottery tickets is by far the one that received the largest share of
purchase intentions. The large jackpot therefore seems to be generating a lot
of interest among customers.
As a next step, we should calculate the potential sales for each product in Thailand.
This will enable us to make a more informed decision about which product to
choose.
When your interviewer provides you with data, you should take a few seconds to
decide how you are going to analyse it. A lot of candidates dive in the data straight
away and miss key insights because they have not planned a comprehensive way
of analysing the data.
Question 3.b.
Here is a potential calculation plan we could follow. All the metrics below should be
calculated per year.
The population of the four countries together is 450m. Assuming that the three
other countries allocate the same jackpot per inhabitant, then the total jackpot
available across the four countries for the year is $2.6 x 450m = $1,170m per year.
There is a lottery draw every week so about 50 draws per year. On average each
draw could therefore offer a $23m jackpot (1,170 / 50).
For questions involving a lot of calculations, you should feel free to simplify
numbers to make calculations easier. A good rule of thumb is that it’s ok to round
numbers up or down by about 5% to 10%.
If you don’t simplify calculations you have got a higher risk of making maths
mistake. Your default behaviour should therefore be to round numbers up and
down as you make calculations. Interviewers will be ok with this as long as you
respect the 5% to 10% rule of thumb.
4. Creativity question
To reverse this trend, and to ensure that the new product successfully attracts
young customers, Thailand Lottery could look into the following four areas:
Thailand Lottery should start by distributing existing products via new channels
(online and mobile) as it is a relatively easy change to make and will have a strong
impact. Over the long run, it could work on refreshing its image and company
culture as well as designing new products. However, along the way, Thailand
Lottery should be careful not to lose its older customers.
5. Recommendation
Based on our initial analysis I would recommend that Thailand Lottery creates a
transnational lottery for the following reasons:
However, there are further areas that the firm should explore before actually going
ahead and launching the new product:
1. Thailand Lottery should make the necessary changes to its teams and brand
image to ensure that the new product will attract young customers
2. The company should make sure that the transnational lottery is feasible from
a regulatory standpoint and that Thailand’s policymakers are favourable to
the idea
3. The company should find ways to minimise the cannibalisation between the
new transnational lottery product and the other main national lottery
products
4. Finally, the company should make sure it is able to secure the financial
resources it needs to launch this new product.
Make sure you clearly state what your conclusion is in the final part of the case.
Here for instance we clearly say in our first sentence that we recommend for
Thailand Lottery to create a transnational lottery. It is critical that you pick a side in
your recommendation and clearly state what you would do based on the
information you have.
1. Situation
Star Production is a start-up that produces low-cost movies. Two university friends
created the company after watching “Paranormal Activity”, a low-budget movie that
attracted a larger-than-expected audience.
Very few low-cost movies end up being very successful. Star Production is hoping to
generate profits by producing a large number of low-budget movies and betting
that some of them become very successful. The company forecasts that most of its
movies will be loss making but that a few of them will be big financial hits.
Considering the high up-front cost of production, and the low probability of success
of low-budget movies, the two friends are evaluating the best ways to finance the
company. They have hired you to help them develop a business plan that can
convince investors that their model is sustainable.
2. Framework
What areas would you look at to determine if Star Production’s business model can
be sufficiently profitable to recoup initial investments in the short term?
3. Quantitative question
Question 3.a.
Your team analysed the cost structure related to movie production and
summarised its results below.
In addition, your team also studied the correlation between a movie’s cost structure
and its revenues using a sample of 1,002 movies released in the past 2 years. The
results are shown in the table below.
Which cost areas should Star Production aim to minimise in priority in order to
generate high profits?
Question 3.b.
After this initial analysis, your team concludes that each movie would cost on
average $250k to produce and distribute. In addition, the company’s overhead
would amount to a yearly fixed cost of $500k.
In order to evaluate how much profit the company could generate in its first year,
your team also did some research on the total revenues generated by recent
movies.
The table below breaks down the average revenue generated in the first year after
movies were released, including revenues from theatre tickets, TV rights, and home
distribution (DVD and on-demand).
On average, how many movies does Star Production need to produce every year in
order to break even?
4. Creativity question
The founders expect that a large share of their movies’ revenues will be generated
many years after the movie was produced. As a result, they are worried that the
company might fail to attract investors who expect to rapidly generate returns on
their investments, and that it might run out of cash before becoming sustainable.
How could Star Production accelerate its revenue generation?
5. Recommendation
The founders of Star Production give you a call and ask for your recommendation
regarding their business model. What would you tell them?
1. Situation
To avoid any misunderstandings, you should ask follow up questions that will help
you understand the situation better. For instance, you could ask:
How many movies does the client plan to produce every year?
Has Star Production started making any movies yet? If so, how successful
have they been?
Prior to diving into the framework question, we also recommend that you clearly
define the objective of the case. For example, you could ask:
How does the client define a “sustainable business model”? Is this equivalent
to a profitable business? If so, how profitable?
I understand the client is a start-up company. Has it already made any
significant investments we should be aware of?
2. Framework
Once you have clarified the situation, you can prepare a framework to analyse the
question. Since the main focus of the company is on profitability, the following
areas could be analysed:
A. Revenues
B. Costs
1. Upfront costs: What upfront investments will Star Production need to make
to start producing movies? Will it need to purchase professional filming
equipment, studio space, or post-production equipment?
2. Fixed costs: What are the fixed costs associated with running Star
Production? What would the administrative costs and fixed labour costs be?
3. Variable costs: What is the average variable cost of producing a movie? In
this category, we should include the salary of actors and staff, movie studio
rental, the cost of film and other equipment.
Both areas of this framework are equally important to analyse in order to get a
sense of the potential profitability of the business.
The profitability framework is often used in cases where you need to analyse the
profitability of your client’s business. When you use it you should make every
effort to adapt it as much as possible to the company you are looking at.
Otherwise you run the risk of your interviewer thinking that your framework is too
generic. This is what we have done here by breaking down revenues into revenues
from theatre tickets, movie distribution and licensing.
3. Quantitative question
Question 3.a.
On the production side, keeping the costs of the director’s salary and the
studio rental low could save as much as $99k per movie and $100k per day,
respectively. These costs are therefore worth keeping under control if the
company wants to minimise costs.
The other production costs offer fewer opportunities for large savings, as the
range of costs is narrower.
Finally, keeping post-production and marketing costs low also offers a good
opportunity for cost reduction as it could save up to $100k and $99k per
movie respectively.
Six expenses out of nine are proportional to the number of days it takes to
produce the movie. As a result, producing the movie over a short period of
time could allow the company to control costs.
Three expenses out of nine are proportional to the number of members in
the team. As a consequence, hiring a small team will also help keeping costs
low.
In summary, there seem to be various ways to keep costs low. For instance, up to
$100k per day could be saved on studio rental costs by choosing the low costs
Question 3.b.
Here is a potential calculation plan to find out how many movies are needed to
break even:
1. Calculate the average revenue per movie
2. Calculate the operational profit per movie (revenue per movie – variable cost
per movie)
3. Calculate the number of movies required to cover fixed costs
Let’s now do the calculations and simplify the numbers when possible.
With four movies per year Star Production would have a high chance of being
profitable over multiple years. However, four movies per year do not guarantee
To minimise the risk of losing money in a given year, Star Production needs to
increase the number of movies it produces. The next step in this analysis could be
to find ways for Star Production to increase the chances of success of each of its
movies.
If you are stuck trying to answer a quantitative question because you don’t know
how to approach it, it helps to go back to the definitions you know. Here, you
probably know that breaking even means having revenues exactly cover costs.
Write down a formula to calculate revenues and costs and see where the number
of movies produced appears. This will show you how to calculate the number of
movies to break even.
4. Creativity question
Given Star Production is getting started it makes sense to develop the “Before
making the movie” ideas first as they correspond to the phase of development the
company is in. As the company progresses it can then develop the “During the
movie making” and the “After the movie making” ideas. These ideas should allow
the company to generate additional revenues in the early stage of the production
cycle and to provide early return on investments.
One way you can generate new ideas for creativity questions is to think about
recent business stories you may have read about. What are the latest product
innovations you have heard of? Were they successful? How could they be applied
to the business you are looking at?
5. Recommendation
Based on the initial findings from our analysis, we can present a strong case to
investors for financing Star Production:
1. First, an average of four movies per year could be enough for Star Production
to be profitable. Producing four movies per year seems manageable
However, there are further areas that Star Production should analyse before
launching:
1. First, it should calculate how much money it will need to raise to launch the
company and what share of the company the founders are willing to give to
external investors
2. Then, it should build connections with actors, directors and movie
distributors in order to make and distribute the movies
3. Finally, it should recruit a team with the right skills to execute the strategy
developed.
1. Situation
Joe’s Cookies is a small cookie manufacturer and seller based in California. Joe
bakes the cookies himself in a small workshop. And he then sells them directly in
schools where his employees either bring a cart or stock cookies in the school’s
cafeteria.
Sales have been flying since Joe launched the business with 10 schools back in
January. However, he has noticed that sales are growing slower at Millbrook, one of
the schools he is working with. Joe has hired you to help him figure out why
Millbrook is growing slower than other schools and how to turn the situation
around.
2. Framework
What are the areas you would look at to identify the root-cause of the slower sales
growth in Millbrook vs other schools?
3. Framework exploration
As you discuss the framework with your interviewer, you find out about the
following information. Which parts of your framework can you cross out as a result?
Joe sells exactly the same cookies at the same price in all schools. The quality
of the cookies he bakes for Millbrook is the same as for other schools.
Millbrook is the only school where cookies are sold in the cafeteria by school
employees. At all other schools, one of Joe’s employees brings a cart every
day and sells directly to students.
The cafeteria at Millbrook does not sell any other cakes or direct substitutes
to Joe’s cookies. And it gets as much footfall if not more as Joe’s carts in the
other schools.
The number of students and staff has remained unchanged in Millbrook
since Joe launched there. All the schools where the company is present are in
4. Quantitative question
Joe summarised sales volume data for you in the following table since his January
launch. What are some of the conclusions you can draw from this data?
Avg sales per day Jan Feb Mar Apr May Jun
Chocolate 50 63 78 98 100 100
Chocolate chip 60 75 94 100 100 100
Ginger 40 46 53 61 70 80
Oatmeal 30 35 40 46 52 60
Avg sales per day Jan Feb Mar Apr May Jun
Chocolate 15 19 23 29 37 46
Chocolate chip 20 25 31 39 49 61
Ginger 10 12 13 15 17 20
Oatmeal 10 12 13 15 17 20
5. Creativity question
Joe confirmed that at the moment he is sending 100 cookies of each of the four
flavours every day. Millbrook must therefore be running out of Chocolate and
Chocolate chip cookies. What are some of the things Joe could do to help accelerate
cookie sales at Millbrook?
6. Recommendation
You are meeting Joe to give him your final recommendation on the problem he is
facing. What would you tell him?
1. Situation
To avoid any misunderstandings, you should ask follow up questions that will help
you understand the situation better. For instance, you could ask:
How much slower are sales growing in Millbrook vs other schools? Has it
always been the case or is it a recent trend?
How does Joe sell cookies in Millbrook? Using one of his carts or stocking
them in the school’s cafeteria?
Prior to diving into the framework question, we also recommend that you clearly
define the objective of the case. For example, you could ask:
What are Joe’s objectives for Millbrook’s sales? To grow in line with the rest of
the other schools?
Can I confirm that revenue is the only metric Joe is interested in here?
2. Framework
Once you have clarified the situation, you can prepare a framework to analyse the
question. Since the main focus is on finding the root-cause of the slower sales
growth in Millbrook, the following areas could be analysed:
Both areas of this framework are equally important to analyse in order to get a
sense of what is driving the slower sales in Millbrook.
3. Framework exploration
We can cross-out the following parts of the framework based on the information
provided:
In-school competition can be crossed out because you are told that “the
cafeteria at Millbrook does not sell any other cakes or direct substitutes to
Joe’s cookies”.
In-school visibility can be crossed out because you are told that
Millbrook “gets as much footfall if not more as Joe’s carts in the other
schools”.
Students and staff number can be crossed out because you are told
that “the number […] has remained unchanged in Millbrook since Joe
launched”.
Students and staff profile can be crossed out because you are told that
Joe thinks there is no “strong difference in student preferences and
disposable income between schools”.
Cookies sold and Cookies price can be crossed out because you are told
that “Joe sells exactly the same cookies at the same price in all schools.
The quality of the cookies he bakes for Millbrook is the same as for other
schools.”
Framework exploration is a step that is specific to cases where you are looking for
the root-cause of an issue. This type of cases is frequent at BCG & Bain but less so
at McKinsey.
This is a good way to get the conversation going with your interviewer in a
structured way. You should update your hypothesis as you collect more and more
information. So for instance here, once you have crossed out all the parts of your
framework in the external category you could say something like: “That’s
interesting, so it looks like we have ruled out all the external factors here. So my
new hypothesis is that the problem is driven by an internal factor. Let’s now look
at this part of the framework”
4. Quantitative question
The two tables list the average number of cookies sold per day broken down by
different flavours and months. The first table is for Millbrook and the second table
is an average for all other schools. Let’s focus on the Millbrook table first and then
analyse the second one.
1. The total number of cookies sold in January was 180 cookies, and in June
341 cookies. That’s an additional ~160 cookies in 6 months. The number
of cookies sold in Millbrook therefore grew by ~90%. Growth in other
schools should therefore be higher than 90%.
2. Chocolate and Chocolate chip are the most populate flavours. Sales for
these flavours started higher than for Ginger and Oatmeal in January. But
have both plateaued at 100 units. The fact that they both plateau on
exactly the same number strengthens our earlier hypothesis on the fact
that the cafeteria might be running out of cookies.
3. Finally, Ginger and Oatmeal cookies have continue growing while
Chocolate and Chocolate chip cookies have been flat. This illustrates there
is still demand for additional cookies in the school. And it confirms the
hypothesis that the cafeteria probably only stocks 100 Chocolate and
Chocolate chip cookies and runs out every day.
Let’s now move on to the second table. There are two interesting trends there:
1. The total number of cookies sold in January was 55 cookies, and in June
147 cookies. The number of cookies sold in other schools therefore
almost trebled in 6 months which is faster growth than in Millbrook as
expected.
2. The number of cookies sold at other schools seems to be growing quite
regularly for all flavours – not just Oatmeal and Ginger. Again this
illustrates the Chocolate and Chocolate chip cookies problem identified is
specific to Millbrook and does not impact other schools.
The conclusion from analysing these two tables is that Millbrook seems to be
running out of Chocolate and Chocolate chip cookies which is preventing it from
growing as fast as it has in other schools.
As a next step, it could be great to double check that this assumption is correct with
the Millbrook staff and to also develop ideas to solve this problem.
For sales to grow faster at Millbrook Joe needs to meet the demand for additional
Chocolate and Chocolate chip cookies or convince customers to buy the other type
of cookies. There are a few different ways in which Joe can achieve these objectives:
In terms of prioritisation, Joe should start by making the most of the space available
to him in the Cafeteria currently and change the mix of cookies he sends every day.
If this is not sufficient to meet customer demand, then he should look into some of
You will sometimes come across creativity questions that look simplistic at first
sight. This is the case here where you might think that the answer is simply to
increase the number of Chocolate and Chocolate chip cookies that are sent to
Millbrook every day. In these cases, you should challenge yourself and still find
two or three categories of things you could do to solve the problem at hand and
then break those down.
We are trying an experiment. If you got this far it shows you are really motivated and
we feel like you should be rewarded for powering through these cases – great work :) To
encourage you to go even further, here is a secret 20% discount code on our case
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6. Recommendation
Our analysis suggests that sales have been growing slower at Millbrook because the
cafeteria is running out of Chocolate and Chocolate chip cookies on a daily basis.
This is confirmed by three data points:
a. First, the data we have been provided with shows that both Chocolate and
Chocolate chip cookies sales suddenly plateau at 100 cookies per day.
b. Second, 100 cookies per day is the exact number of cookies that Joe sends to
the Cafeteria every day.
c. And finally, the growth in Ginger and Oatmeal cookies has continued in April
to June which suggests there would be enough demand for additional
Chocolate and Chocolate chip cookies if they were available.
In addition, we recommend that Joe looks into a mix of the following steps to turn
the situation around and accelerate growth at Millbrook:
Our client is a large disposable nappies manufacturer in the US. They are thinking
about entering the Indian market and have asked you to estimate the market size
for disposable nappies in India. Can you estimate that number for them?
To answer quantitative questions where no data is provided, you should follow the
same approach as for regular maths questions.
Map out the calculations you are going to do
Present your plan to your interviewer to get feedback before starting the
calculations
Do your calculations and simplify the numbers when possible
Sense check your results
If a plan does not come to you naturally when trying to answer the question, it is ok
to ask your interviewer for a few seconds to gather your thoughts.
Here is a potential plan you could have shown your interviewer for this specific
question:
1. Estimate the number of kids of the right age to wear nappies in India
2. Estimate the percentage of those kids actually wearing disposable nappies
(as opposed to non-disposable)
3. Estimate how many nappies kids wear per day and then per year
4. Estimate the market size in number of nappies and value
A good way to sense-check this result is to calculate the price per nappy. Let’s divide
the market size in value by the market size in volume: $3bn / 35bn nappies is less
than 10 cents per nappy which is reasonable.
Once you are done carrying out your estimate, you need to:
Relate the result back to the initial question
Suggest next steps in the analysis
Our estimate suggests that the market size for nappies in India is $3bn, or 35bn
nappies per year in volume.
An important next step here would be to refine some of the assumptions we used.
In particular, finding out the exact percentage of kids wearing disposable nappies in
India seems important as this is the assumption that feels the most uncertain at
this stage.
You won’t always have a good number on top of your head when having to make
an assumption. For instance here, you might not have known that kids wear
nappies until they are three years old and use an average of four per day. This is
completely fine.
Finally, a good way to give authority to your assumptions is to back them up with
some form of evidence. For instance here you could have said, “I don’t have kids
but I know from experience with my little cousins that kids wear nappies until they
are 3 years old and use about 4 nappies per day.” This is a great way to ground
your assumptions in real life.
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