Wharton Practice Case Interviews Guide

WhartonConsultingClub2004/05PracticeCaseInterviewGuide1WelcomeConsultingClubMember,Thismanualistheresultofsignificantcontributionsbyyourfellowclassmates,whohavecontributedrealcasequestionsfromthe20042ndyearrecruitingseasontoassistyouinpreparationforconsultingcaseinterviews.Manystudentsareinitiallydauntedbytheprospectofpreparingforcaseinterviewswhichareforeigntoanythingtheyhavepreviouslyexperienced.Inourviewhowever,thereisnoneedtofeeloverwhelmed.Preparingforcaseinterviewsismuchlikelearningtoplayanewsport.Until,youactuallygetoutandstartplayingitcanbedifficulttounderstandwhatisgoingon,butonceyougetintoit,itallcomestogetherwithpractice.Literallyvolumeshavebeenwrittenonthetopicofcaseinterviewsandwestronglyrecommendthatyoureviewatleastoneofthemanypublicationsavailable.Readilyavailableresourcesincludethe2003WhartonCasebook,whichincludesadetailedintroductiontotheCaseInterviewprocess,DavidOhrvall’sCracktheCase,ortheVaultGuidetoCaseInterviews.Readingthesetextshoweverisverymuchlikereadingatextonhowtoplaybasketball–itmightgiveyouabasicunderstandingforhowtoplaythegamebutuntilyougooutandshootafewjumpshotsyouwon’tbemuchofaplayer.Itiswiththatinmindthatwehavefocusedthisyear’sguideonactualcases,includingquestionsfromrealinterviewstogetherwiththeinterviewee’ssolutionsupplementedbycommentsandrecommendationsfromtheCaseBookEditorialTeam(whohavehadthetimetoconsiderpreferredsolutionsandframeworksawayfromthepressureofalivecaseinterview)Ouradvice:•Readatleastonepreliminaryguide(moreifyoufeelnecessary)•Formasmallgroupof3-4memberswithsimilarexpectationsandtimecommitments•Gettogetherregularlytopracticecaseschoosingcasesofasmanydifferenttypesandfromasmanydifferentsourcesaspossible(allinterviewersaredifferentandyouneedtogetusedtoverydifferentstylesofinterview)•Givehonestfeedbackoneachothersperformance(youwouldratherfindoutaboutyourerrorsnowratherthaninarejectionfromaliveinterview)•Getusedtothinkingoutloudandstructuringyourthinkingclearly•Doasmanycasesasyouneedtofeelcomfortablewiththeprocess.Forsomepeoplethiswillbetenforothersitwillbesixty.Onlyyoucantellwhenyouarereallygettingagriponthings.•Remembertouseagooddoseofcommonsense.Caseinterviewsareaboutrealworldsituations,youwillnormallyhaveabettersensefortherightanswerthanyouinitiallygiveyourselfcreditfor.Yourownexperienceandyourfirstyearsubjectsshouldequipyouwelltoknowwhattheissuesare.Goodluck!!BenSimonsRichardOsborneVicePresident–MemberEducationCaseBookEditor2CASEINDEXCase#TitleFirm–RoundPage1OpticalFibresBCG–Rd132HoldingCompanyBoozAllen–Rd153ElectionBoozAllen–Rd174PerpetualMotionBain–Rd195NutracorpMcKinsey–Rd1116PartyGoodsBCG–Rd1137RazorsandBladesBCG–Rd1158SupermarketBCG–Rd1169ChewingGumATKearney–Rd11810AlcoholDistributionBoozAllen–Rd12011GasStationLEK–Rd12212TelematicsBCG–Rd22413ManufacturingBCG–Rd22514CellPhonesBCG–Rd12715ExplosivesBCG–Rd22916PharmaceuticalsBCG–Rd23117ElectronicsRetailersBCG–Rd23418AeroIncaMcKinsey–Rd13719PharmaceuticalsIIZSAssociates–Rd23920Hotel(Post9/11)BCG–Rd14021BeerBoozAllen–Rd24122BenjaminCarpetsMcKinsey–Rd24323OtherSamplesBooz/LEK/McKinsey45CASE1:OPTICALFIBRES(BCG–Round1)Ourclientmakesopticalfibre(hasvolumeadvantagestocopperwire)whichismainlyusedbythetelecom,cableandmobilephoneindustries.It’smadeinglassstrandsandrolledonto25kmspools.Theircustomers(whoaregenerallymajorTelecomsnetworks)wouldbuyahugequantity,bundleitup,digatrenchandputthebundleoffibresintheground.They’veseena50%declineinrevenues,andhaverecentlybroughtinanewCEO.ThenewCEOwouldliketoknow:a)Whydidrevenuesdrop50%inoneyear?b)Canheexpectanimprovement,andifsoinwhattimeframe?c)Howdoesourcompanycomparetoourcompetitors?AdditionalInformationProvidedAfterRelevantQuestions:•Opticalfibreissimilartoacommodity,soconsumersdonotpurchasebybrandandpricingisinlinewithcompetition.•Therehasbeennosignificantchangeinsupplyfromthecompany’sperspective.•Therearenodirectsubstitutesandnoregulationchangesduringthisperiod.•The“usage”oftheopticalfibres,forvoice,dataandinternet,hasactuallydoubledeachyear.(meaningyouwouldthinkyou’dactuallyneedtwiceasmucheachyear)•Customersareaskingforless.•Nomajorchangesincustomer’sindustry.Evenspreadacrossindustriesforproductsales.•Currentusageis5T/second,butcapacityis100T/second.Interviewee’sSolution:Whydidrevenuesdrop50%inoneyear?Ideterminedtheproblemwasthatbecauseitissuchaneffortandexpensetodigthetrenchestoputthefibrebundlesin,thecustomerdoesitasinfrequentlyaspossiblewhichleadstoovercapacity.Canheexpectanimprovement?Ifsowhen?Ifoundoutthattheybuyayearinadvanceofneedingit.Sinceusagedoubledyearly,Iworkedoutthatcustomerswouldreachcapacityin3.5years,andthereforewewouldbeimpactedfor2.5years.TheCEOwantsabenchmarkslidewithhowwecomparetoourcompetitors:whatwouldbethemainitemsyou’dwanttoseeonthatslide?IaskedforMarketShare(leader),Cost(lowestcost),People(noadvantage),CustomerBase(noadvantage),Product(norealadvantage),andBalanceSheet(highest)Heaskedifwecouldweatherthestormorifwewereintrouble.Isaidifwehadaprettyhealthyfinancialsituation,wecouldweatherthestormfor2.5yearsbutthatitwouldbeworthwhilelookingforotherw