An Insiders Guide to Consulting Interviews* TS Strategy Group www.pwc.

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Interviews are key components of the application and selection process. They are not meant to be daunting (by us anyways), but are intended to help match your interests and capabilities with our needs and offering. The purpose of this guide is to help you become comfortable with the somewhat infamous case study interview, central to many consulting rms interview process. From the candidates perspective, the main purpose of the case study interview is to show the interviewer how you think and to prove your analytical abilities. Questions are best answered by thinking about the key issues of the problem, approaching the answer methodically, and using some creative thinking. In this guide, we cover the key techniques of the case study interview and provide you with a selection of sample cases for you to practice on. Our goal is that when you are confronted with a case study interview, you will be condent, fully prepared and be able to perform to the best of your abilities. Bear in mind that there may be more than one right answer (or none), and the important thing is to display the ability to think critically about the problem.

The TS Strategy Group

The TS Strategy Group in PricewaterhouseCoopers is rapidly growing, combining the visionary, entrepreneurial and friendly spirit of a small, niche consultancy with the resources and reputation of the worlds largest professional services rm. We are focused on developing growth and M&A strategies for our clients, which include: private equity rms, premiere global corporations, and strong and vibrant middle market players. We are currently hiring high caliber individuals with the analytical and problem solving skills needed to contribute to our practice in New York. To learn more, visit our website at www.pwc.com/strategycareers.

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Contents
Introduction to Consulting Interviews The Case Study Market Sizing Questions General Interviewing Tips Case Study Practice Examples 1 2 3 5 6

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Introduction to Consulting Interviews

Interviews can be daunting prospects, but if you know what to expect you can relax and be condent that youll do your best. Remember that if youve gotten this far, the company in question is interested in you and believes that you have the potential to do the job. As such, interviews offer you the chance to shine, and further convince employers of your abilities. If you wish to appear condent, assured and professional during assessments, and therefore have the best chance of success, good preparation is vital. This guide will help you to relax on the day and let your best qualities shine through.

Market Sizing Problems

The other common style of questions is known as market sizing. Here you will typically be asked to make an estimate of an abstract quantity such as the number of taxi cabs in New York or the number of golf balls sold last year in the US. In these cases, the interviewer is more concerned with how you get to your nal answer than what your answer actually is. Market sizing cases are often wrapped into a longer case study question and can often be used to test your mental arithmetic abilities.

General Interview Tips

There are a number of good, general interviewing tips which should be borne in mind when you are interviewing. See our section on general advice for more details on these.

Case Study Interviews

The main purpose of the case interview is to demonstrate how you analyze a problem. So let the interviewer hear your thought process and always explain fully any assumptions you make. There are two types of case studies. The most common type of case is an interactive case. The interviewer will outline a scenario for you and will provide additional information on the company and/or the industry as the interview progresses. The second, less common format is the one-sided case. Here the interviewer will present you with an initial set of facts and leave you to solve the case and to state any assumptions that you make along the way. See our section on case studies interviews for advice on how to approach case study questions. One of the best ways to become comfortable with the case study interview is to become familiar with the types of questions and thinking required. At the back of this guide, we have provided a set of cases for you to practice on.

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The Case Study

What companies are looking for in case study interviews
The main purpose of the case interview is to show the way in which you analyze a problem, so let the interviewer hear your thought process and any assumptions you make. Case questions are designed to test your analytical abilities under stress and when you are presented with incomplete information. There can be many right answers to a case study but there also is a right way to approach the case study. Try to relax during the case and see it as an opportunity to learn more about the drivers of success for a company or industry. Feel free to take your time and to think silently. You are not expected to provide a full answer in just a few minutes and with no thought.

declining revenue, you should look at what is driving revenue and how that may have changed). Continue to probe down each area you want to cover but pay attention to hints from the interviewer as to when you should move onto the next area and when you may require additional information. Be sure to think out loud throughout your answer 5. Sum up your ndings. Summarize your ndings where you can and draw your conclusions stating what assumptions you have made. Where necessary, suggest possible next steps for further analyzing the situation Importantthroughout the case, always understand and stay focused on what the question is asking, or what the key issues are

Types of case study interviews

Case study interviews typically resemble the following types of problems: Declining revenues A simple case problem where a companys sales are down and you have to gure out why. Your answer may also require coming up with ideas for how to boost future sales Declining prots Will involve a company where either sales are down, costs or up or a combination of the two. Expect to delve into the revenue and cost sides of the company to nd out what is causing the declining prots. In many cases, the interviewer may give you some direction and say the problem is related to revenue or costs specically Be aware of situations where both revenues and prots are increasing but costs have also been rising. What may be happening here is that prot margins (the ratio of prot to revenue) may be declining. Again, expect to have to examine both the cost and revenue streams of the company Market Entry A common form of case where either a company is looking to enter a new geographical market or

How to approach a case study

Below is a simple step by step guide to help you approach the case interview. 1. Pause and think. Once the interviewer has outlined the case, pause for a moment to think through what you think the key issues are and how you will structure and present your answer. You may want to think what simple model to utilize such as analyzing cost and revenue streams or a basic cost/benet analysis 2. Ask questions. Be sure to ask questions about any parts of the case you did not understand or are unclear about. It is vital to begin your answer to the case with a clear understanding of the problem 3. Summarize how you will proceed. Outline the way in which you are going to answer the case to the interviewer 4. Provide your detailed answer. Once you have decided on the approach you are going to take and you have communicated this to the interviewer, you should begin your in-depth analysis. Pick a route to begin your analysis (for example if you are looking at

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is considering launching a new product. You may be asked to estimate the size of the new market. Additionally, you may be asked to think about issues surrounding competition in the new market, potential customers and the companys own ability to enter the new market Investment decision A narrower form of case question. This could involve evaluating whether a company should invest in a new manufacturing plant or purchase a new technology. A simple cost benet analysis can often be used to evaluate this decision Acquisition opportunity You may be asked to evaluate whether one company (the acquirer) should consider purchasing another company (the target). Issues to consider may include how the target would benet the acquirer, for example by adding new products, adding new customers or providing access to new markets. Negative aspects of the acquisition may involve the price of the target or integration issues This case question may also be ipped round and positioned as an opportunity to sell a company or part of a company Strategic Outlook A broader case question that may give you the opportunity to show some creative thinking. You may be asked to consider the strategic outlook for a specic company or a specic market (such as the iPod or the company, Apple). Expect to cover issues such as whether the market is growing, how competitive the market is, and threats to future performance

Market Sizing Questions

Market sizing questions, in their most basic form, ask you to estimate the size of a particular market (hence the name). In the business world, this information can be especially useful when trying to gauge the attractiveness of a market. Within an interview, a market sizing question may be asked in a clear and simple form (such as how much is spent on domestic light bulbs in the US each year). Alternatively, the question may be disguised as more complex (do you think that xyz company should enter the market for car insurance). What is really required by the candidate for the complex type of question is to peel away the outer layers to identify the core of the issueestimating how many car insurance products are sold each year. Recruiters use market sizing questions to test candidates number abilities, power of analysis and their common sense. For example, if you were asked to size the value of the annual domestic light bulb market in the US, you would be required to make several assumptions about the market. (How many homes are there in the US? How many rooms are there in the average house? How long does the average light bulb last?). You would then be expected to make a few basic calculations given these assumptions. As you work through the problem, the interviewer will also be looking to gauge your common sense. (Did you assume that all houses in the US use the same types of bulbs?). A common mistake in market sizing questions is not to answer the question. In the light bulb example above, you are asked for the value of light bulbs sold. Many candidates would stop once they have estimated how many light bulbs are sold each year but this is not what was asked. Only a simple additional calculation is required to work out value (multiplying the total number

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of bulbs by an average price) but doing this nal step shows that you were listening (to the original question) and that can you follow instructionsboth important workplace attributes. Finally, at the end of a market sizing problem, try to offer a sense check to the interviewer. For example, your answer for the annual value of the light bulb market came out at $5m. You can sense check this simply by saying that there are about 100m households in the US, so if each only bought one light bulb a year (which is a very low estimate), the market would be worth $100m. You now know that your answer is much too low and you can go back and revisit your methodology and assumptions.

How many people ride the New York subway on a weekday? Hint: Start with an estimate of the number of people in New York. Then make assumptions as to what proportion ride the subway. You may want to think about the different groups of people in New York such as the split between residents and tourists, workers and non-workers. What is the value of all the postage stamps sold in the US last year? How many square feet of pizza are consumed by college students each year? How many car radios are manufactured in the US each year? How many games of soccer were played last weekend

A few tips:
Market sizing questions can seem intimidating. Below are a few tips to help lower the pressure and improve your performance:

Stick to round numbers. Even if you are math genius, both you and the interviewer will nd your answer much easier to follow if you dont over-complicate the math Explain your thinking. Market sizing questions are about your ideas. The interviewer is concerned about how you get to your answer, not what the nal answer actually is Write things down. If you need to, write down the key parts of the question and your basic working. The interviewer would prefer you answered the question well using a pen and paper than badly doing all the workings in your head

on the East Coast? How many boxes of breakfast cereal were consumed in the US last year? How many paper clips were sold in California last year? How many golf balls are in the air at noon on a Saturday in the US? Estimate the manufactured cost of one Oreo cookie. How many calculators were sold in Chicago last week? How many miles are run by the population of the US in any given year?

Example Market Sizing Questions:

How many bars of hotel sized soap are produced each year around the world? Hint: Start by estimating the number of hotels in the world. Simplify the question by just looking at hotels in major cities and resorts in the world. Then make some assumptions about the number of rooms per hotel and room utilization rates.

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General Interview Tips

How do you look?
First impressions arent necessarily everything, but they count for a lotespecially in an interview situation. It sounds like common sense, but its surprising how often these simple rules are overlooked.

Get your head straight

Write a list of examples to illustrate your experience and skillsfrom both an academic and an extracurricular and work experience perspective. Having these at the front of your mind in an interview can help you to speak more uently and condently. Focus on positive examples that demonstrate something you succeeded with or have learned from.

Dress smartly but comfortably and ensure your shoes, hair and nails are clean Greet your interviewer with a smile and a rm handshake Maintain eye contact with your interviewer so that you appear condent and relaxed (but dont eyeball your interviewer!) Relax, sit comfortably in your chair and try not to slouch or dget Crossing your arms makes you seem defensive. If you arent using your hands to illustrate a point, keep them on your lap

On the day: Whether its for a simple interview or a more involving assessment day, make sure youre not late. Take with you everything youve been asked to bring, but dont have too much clutter with you Try to stay relaxed and focused because excess nerves will prevent you from performing at your best. Remember that interviewers get nervous too! You wouldnt have got this far if you werent capable of getting the job.

In an interview situation

Listen carefully to the questions youre asked Smile, show enthusiasm and energy Think before you answer Ask for clarication if youre not sure whats being asked Try to ask two or three informed and intelligent questions at the end of your interview Leave on a positive note, thanking the interviewer for their time

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Case Study Practice Examples

Example 1: Declining protability
You have been asked to help a major producer of distilled spirits in the United States. The main products sold by the company are a selection of mid-priced rums and two brands of mid-priced gin. Protability has been declining over the past few years, what could be causing this? Additional information: The selling prices of the gin and rum lines are roughly the same. The split of products sold has stayed pretty stable at around two thirds rum, one third gin over the past few years. Total sales for the company are growing at about 5% a year, about the same as the industry average. As you analyze costs, you nd out that production costs have remained constant, advertising costs on average have remained constant, distribution costs have increased signicantly. Both products are sold throughout the United States. In 15 states, where alcohol is sold in small private owned supermarkets and liquor stores, shelf space is very expensive and trade promotions are vital. These stores are also becoming less and less happy to hold inventory which is driving up distribution costs as more deliveries are needed. In the other 35 states, liquor is only sold through state regulated liquor stores. In these states, distribution costs are much lower. Advertising of alcohol is much more tightly regulated, and as such, advertising spending is lower.

Example 2: Decline in market share

A producer of specialty cheeses has hired you to help nd out the cause of its recent decline in market share. Additional Information: The company produces plastic wrapped specialty cheeses at three price points (value, midrange and premium). The market share loss is primarily in the premium category. The cheeses carry a well known brand. The cheese is sold in grocery stores, delis and specialist supermarkets. Research has shown that the delis, grocers and supermarkets have maintained the same amount of facings and space for the product. Advertising and marketing plans have been largely unchanged throughout the period. The products in the premium category carry a higher price and have slightly higher margins. Competitors have maintained their prices during the recent loss in market share. There are three other main competitors in the specialty cheese market. Your client has a 40% market share, the other three share equally the rest of the market. The overall market for specialty cheeses is growing. The competition sells its cheeses to the same channels that your client does. Research on customer buying habits has shown that while the typical prole of a premium specialty cheese customer has not changed, customers feedback was that there was a good deal of variability in the quality of product produced by your client. Sometimes the product was better than competitors, other times not. This was causing customers to change to competitor brands.

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Example 3: Investment decision

A ground coffee company has seven manufacturing plants in the Midwest. These plants service the whole of the United States. Their plant in Kentucky is in need of refurbishing. Which of the following is the best option for this plant? 1. 2. 3. 4. Refurbish the existing plant Build a larger plant at the current location Build a similar size plant at a new location Build a larger plant at a new location

Hint: Initially, the manufacturer can either choose to drop its price or benet from additional prots.

Example 6: Acquisition opportunity

You have been asked to assist a manufacturer of steel rods to help them decide whether to acquire a small local rm. What factors should be considered and would you recommend the acquisition? Additional Information: Your clients margins are 10%. The target rm is protable with margins of 5%. According to company management, your clients superior prot margins are down to economies of scale and a stable labor force. Both companies compete in the same geographical region, the North Eastern US. The targets customers are typically local construction rms. Your clients customers are typically large commercial construction companies. Research shows that demand for local housing is growing but that commercial ofce market is slowing down. The smaller rm has many strong relationships within the local community.

Hint: The two key issues to consider are the size of the plant and the location of the plant. You should analyze them separately

Example 4: Expansion / Market Entry

A major airline is deciding whether it should add an additional route from Paris to Chicago. How should the airline go about analyzing whether the additional route would be a good idea? Hint: Break the problem down into revenue opportunities and expected operating costs.

Example 7: Strategic Outlook

Your client is the largest North American producer of plastic packaging for fruit and vegetables, with a 75% share of the market. You have been asked to assess the strategic outlook for the company. How would you attempt to assess future prospects for this client and what recommendations might you make? Additional Information: Your client had 100% of the market until 18 months ago. A local upstart company appeared in the South East region of the US has taken nearly all of that market. This company bought new technology from England which has made this upstarts factory highly efcient. As a result they have been able to undercut you on price.

Example 5: Manufacturing - Cost advantage

A plastic cup manufacturer has advanced a new technique to improve its manufacturing process. As a result of this, the manufacturing cost has been reduced from $0.75 to $0.65. How can the manufacturer best exploit its cost advantage? Additional Information: The manufacturer is the market leader with a 30% market share and supplies directly to major supermarkets and to ofces. The number two player in the market has a 20% market share. The rest of the market is made up of lots of smaller players.

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Your production costs are as follows. 25% for PE, a commodity plastic chemical. 30% manufacturing costs including allocated xed costs and labor and energy. Distribution and storage costs 15%. Marketing and corporate overheads cost 10%. Your margins are 20%. The clients factory is 25 years old and it continues to use the same technology that it used 25 years ago.

The costs of production (as a % of selling price) have changed as follows: 2005 Sugar Water Manufacturing costs Distribution Marketing Sales Force Prot before tax 18% 10% 25% 5% 19% 7% 16% 2003 16% 10% 25% 6% 21% 9% 13%

Example 8: Market Entry

Joes Pizza has decided to enter the home pizza delivery business in London. The market for home delivery is currently dominated by Arthurs Pizza. Joe, the owner of Joes Pizza has asked your consulting rm to help his company analyze issues that will determine its likelihood of success in the London Pizza market. How would you analyze the pizza delivery market? Hints: You may want to estimate of the size of the London home pizza delivery market. This could be obtained by knowing the population of London (about 7 million) and making some assumptions about pizza consumption. You may also want to know information about Arthurs Pizza such as its sales, total number of stores, and its market share. If there are any market segments targeted and served by Arthurs this would also be good to know. What types of product do they offer; how much do they charge; what is the cost structure of their business and what products are most protable.

The products are mostly sold through supermarkets and convenience stores. The two largest competitors both feature a much broader line of soft drinks and together have 50% of the market. The sales force was cut to reduce costs although the same number of supermarkets and stores are still covered by the 2005 sales force.

Example 10: Technological Breakthrough

A small R&D lab on a south pacic island has developed a super durable ink which means its can produce pens that never run out of ink. The lab is now in a position to license the product to a pen manufacturer. What will be the effect on the global pen industry? Additional Information: The pen industry is dominated by three multinational players. The three companies all sell similar products for about the same price out of the same types of stores. Around the world, there are several small regional players a few high-end manufacturers. There have been no major innovations in pens within the last 10 years. Hints: Think how the new technology may enter the industry. Either one of the main players obtains the technology or all the players obtain some version of this technology.

Example 9: Losing market share

A large soft drinks company has been losing market share over the past few years, from a high of 25% to 23%. However, prot margins have been growing. What could be causing this? Additional Information: The size of the soft drinks market has grown from $70bn to $80bn over the last two years. The company has not added or discontinued any products over the past two years.

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Example 11: Declining performance

Your client manufactures specialized metal shelves out of one plant on the West Coast and one plant on the East Coast. Prots have declined by 20% over the past two years although revenues have remained relatively at. What may be causing this decline and what could you do to help reverse this trend? Additional Information: The companys sales are split as follows: 50% to supermarkets, 25% to ofces and 25% to the pharmaceutical industry. The supermarket and ofce shelve divisions are located on the East Coast, the pharmaceutical division on the West Coast. Revenues are up 10% for the ofce and pharmaceuticals divisions but prots are down 10%. For the supermarkets division, revenues are down 10% and prots are down 30%. Labor is the major cost of production for these metal shelves. The East Coast plant is unionized, the West Coast plant is not. Hint: A protability analysis may make sense looking at revenues and costs. On the cost side, think about what are xed costs and what are variable costs.

The current plant is unionized and additional shifts are not possible. Raw materials are purchased from a government owned company at prices which are set by a yearly contract. The cost structure for brick production is as follows: Raw materials Labor and other xed costs Distribution Sales & overhead Pre tax prot 30% 15% 25% 15% 15%

Example 13: Declining Sales

You client manufactures AM/FM radios. You have been hired to understand why their sales have declined signicantly over the last year. You have been asked to gure out why the decline has happened and make some recommendations as to what to do about it. Additional Information: Your client used to have a steady 35% market share, the second largest in the industry. It now has a 45% market share. AM/FM radios are now a mature market. Your client manufactures a full range of AM/FM radios and is employing the most up to date technologies. Over the last year, your client has been losing sales reps but loyal sales reps claim that their sales are at record highs. Traditionally, your client targeted two customer groups, under 30s and over 50s. In the last year, sales have fallen the most among the clients younger customers. The rm has lost several major retail clients due to retailers inability to sell your rms products.

Example 12: Investment decision

You have been hired by the number one Spanish producer of bricks. Your client currently has a 40% market share and believes it could have more. It currently is running at 100% capacity at its one plant, located just outside Madrid. You have been hired by the head of operations to help him decide whether to add capacity to the current plant or build another plant. Additional Information: The price of bricks is set by market prices in Spain. Land is available to expand the current plant and there is also suitable land available near Mlaga on the south coast of Spain, about 300 miles away.

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Example 14: Declining protability

Your client produces and sells a selection of mid-level womens clothing lines in several European countries. The companys brands are well established in their markets. The clothes produced are similar in terms of the raw materials required and production processes used. Performance over the last 10 years has been good although prots have been shrinking over the last two years. The CEO is thinking about changing her strategy and is looking for your advice about what she should do. Additional Information: The mid-level womens clothes industry is made up of many small and medium sized companies and a few large companies who own a portfolio of brands. Your client has a manufacturing plant in each of the countries it sells in and transportation costs are low.

Example 15: Low protability

Your client is a leading producer of breakfast cereals. Originally, the company started as a single product line but has expanded its sales by adding additional products. The production process can be simplied as manufacturing and packaging. Management has hired you as they are concerned that although sales are growing, prots are not increasing at the same rate. What advice would you give to your client? Additional Information: Costs: Raw material prices have fallen in recent years but are expected to rise again in the near future. Labor and xed capital has increased per unit more than proportionally over the last 10 years. Revenues: The number of trade (private label) brands has doubled over the past ve years. Retailers are increasingly demanding large introductory discounts for new products. Your client has had a high failure rate for new products.

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