If you're reading this then you are probably looking to apply for a job in consulting, specifically strategy consulting. Case interviews have been used by strategy consultants for many years and even decades and every strategy consultant has passed a case interview.
Over 60 consultancies in London use case interviews in their recruitment process. These will all vary between firms but the fundamental requirements are the same - show the key characteristics required to be a good consultant.
At Grad Interview Prep we have helped over 10,000 candidates study for their case interview and many of our alumni are now working in the top strategy consulting firms in the world. We are yet to come across a strategy consultant that has passed the case interview without practising beforehand. Answering case interviews isn't complicated when you know how.
The case interview is a hypothetical business problem often based on a previous project the interviewer has completed:
A national energy retailer is looking to double operating margins from 2% to 4% in the next 4 years, what would you recommend?
An African bank is looking to expand to Australia, how can they do this successfully?
Both questions are very high-level and very vague but have been used in case interviews before.
There is always more than one answer to a case interview and the interviewer is rarely interested in your answer and instead more interested in how you arrived at the answer. A strategy consultant is expected to bring structure and logical thinking to the question in order to generate a strategy founded in reasonable evidence and assumptions.
This is because strategic business decisions will come under scrutiny by multiple stakeholders, including shareholders, board members, customer, regulators etc. So when a decision is questioned business executives need to be able to evidence how they arrived at the strategy. This is why consultants love to arrive at conclusions founded in data analysis. It is easy to justify and defend the decision to the client.
In the real world, consultants will gather the data required to reach a conclusion through client interviews, customer interviews, expert interviews, public data, private data, surveys and more. In a case interview the only source of information is the interviewer so candidates are expected to engage in dialogue and ask questions throughout the interview.
To pass the case interview you must therefore demonstrate the key characteristics of a good consultant:
If you can demonstrate these skills during your case interview then you will score highly. If you can demonstrate these skills as well as good emotional intelligence i.e. conversational and rapport building skills then you will receive a job offer.
To demonstrate these skills there are different methodologies and frameworks you can use. The most important thing is that you start by building structure, from there it is easy to demonstrate the other skills.
Structure can be applied even when answering the most basic questions such as 'walk me through your CV'. Your CV is likely already structured into Education, Work experience and Extra curricular. When giving an overview of your CV why not open with a sentence outlining that structure e.g. "Okay, I will talk through the three sections; Education then Work experience and finally extra curricular." This sentence immediately demonstrates structured thinking that is easy for the interviewer to follow.
When answering a case interview we recommend a five step methodology to provide structure:
After you have heard or read the question you need to clarify your understanding with the interviewer. This can be a technical component e.g. what is operating margin? or a contextual understanding e.g. have I understood correctly that an airline has multiple sizes of aeroplane in their fleet?
By clarifying you prevent yourself starting in the wrong direction and also buy yourself valuable thinking time to digest the question.
To buy an extra 10 seconds and maintain dialogue with the interviewer repeat the question back with your clarifications intertwined in the question and ask "is my understanding correct?".
At this point the interviewer will give you the green light to move forward with the case and if there is any confusion later on then you are unlikely to be marked down as you made a conscious effort to clarify and align your understanding at the start.
Designing a framework forces you to consider all the areas of focus. This may be a concept you haven't used before but it is essential when answering a case interview.
A framework should be drawn on paper and show all the component parts that make up the business question. Each component should be given consideration when working through the framework; ultimately one or two will be the focus of the answer.
A framework is a structure that can be used to explore the question and identify the root cause of the problem. It also shows your interview how you are expecting to reach an answer and gives them the opportunity to course correct if needed.
Physically showing your framework to the interviewer allows them the chance to follow exactly how you are thinking about the problem and make suggestions if needed.
Before you move onto working through the framework give your initial thought at what the answer may be.
Consultants are hypothesis-based problem solvers. This means starting with an idea of what the answer may be and then working to prove or disprove that hypothesis. Once proven or disproven then you can move onto the next hypothesis.
For example, you may state "Given the economic climate I suspect it will not be possible to increase profits by increasing sales and instead they will need to reduce costs, therefore I will begin by exploring the cost base of the client..."
This is a reasonable hypothesis to make and if it is ultimately disproven you can still move onto exploring sales but it provides a place to start.
Different consultancy firms have different types of case interview but there are two main types you should be aware of:
This case type follows a structured case interview style whereby the interviewer provides an information pack (usually containing data) and asks pre-determined questions about the case. You will be given a set amount of time to digest and analyse the information pack before the interviewer begins questioning you.
There will be too much information for you to consume within the amount of time you are given so skim read the whole document first to give yourself the context and then go back and focus on the key areas.
This style can be confusing as it doesn't follow a known framework and showing structure can be difficult. We recommend that you gather your information and analysis in a structured way so that when you are being questioned by the interviewer, you can show them that you are organised and structured.
Companies that use an interviewer-led case style:
The more traditional case type begins with an open-ended question and the data and information must be gathered from the interviewer.
This unstructured case interview style is well known and requires the candidate to take control of the dialogue, much like a client meeting in a real-life project scenario. Maintaining the dialogue whilst continually improving your understanding of the problem is what the interviewer is looking for.
Frameworks are easier to apply to this case interview style because most of the questions follow similar scenarios e.g. market entry, profitability, revenue growth etc.
Companies that use an candidate-led case style:
In rare circumstances you may find yourself facing the written case such as an online application. As it suggests this is an exam-style case whereby you are presented with the situation context and supporting information and expected to communicate your answer in written form.
The information is likely to dictate the hypothesis that you must then prove or disprove with the other information available. This uses the same skills as a numerical reasoning test as it is using data and graphs to find answers in order to test the hypothesis.
When writing an answer it is important to still remember structure. The use of basic writing tool techniques such as bolding titles, using bullet points for lists and line spacing for paragraphs will have a positive impact on your scoring. This is because being able to communicate clearly and concisely in written form is critical for a good consultant.
With a written case you may also be asked to present your findings at the end of the given time period to replicate a client-facing scenario whereby you are expected to talk through your findings. If you are asked to present then the key is to maintain confidence and talk with conviction throughout. Even when someone says something correct it can be interpreted as incorrect if it is communicated with nervousness or a lack of confidence.
Some hiring firms have used group cases to test candidates ability to work in teams. The overall test is how candidates cope with having their ideas challenged and how they accept ideas that aren't their own.
Whilst it is good to be a proactive member of a group and take the lead, a common mistake in a group case is to not give others the opportunity to contribute. An easy way to do this is ask for quieter members input into the conversation explicitly e.g. "Mary, do you have any thoughts on this?"
Managing the interpersonal dynamic of a group case replicates a real-life project situation. On a project you will be working with people that you may not know very well or are very different to but it is important to gather viewpoints from all team members to ensure alignment and the best chance of reaching the right answer.
Types of frameworks
There are three key framework types that can help tackle the toughest of case interviews. Whilst it is possible to learn particular frameworks prior to interviews, using frameworks from memory can result in being penalised by the interviewer. Deploying one of the following framework types with bespoke parameters is all that is required to develop an exceptional answer.
The three framework types are; bucket, issue tree and matrix. All three allow for a methodical approach but are more effective when used to answer different types of questions.
Issue tree: Great for profitability questions and any market sizing elements. Each ‘root’ of the tree allows for isolation of the problem and clear analysis. Often this is used in conjunction with a bucket framework.
Matrix: Usually taking the form of a table but sometimes a pair of axis (BCG matrix). This framework is great when having to draw comparisons such as in competitor analysis or M&A suitability. The key is to use only the minimum necessary parameters in order to make a clean and simple comparison.
Bucket: The most commonly used framework, it is very good for finding the root cause and developing a good idea of the bigger picture. Laying this framework out at the start also provides a checklist to work through which should prevent any unexpected mental blocks.
Five Key Frameworks
1) Profitability framework
This framework takes the form of an issue tree (sometimes referred to as a logic tree), it isolates the clients profitability problem into its key components. Following its branches, it is easy to identify where the issue lies and visualise where it fits into the bigger picture. The branches of this issue tree satisfy the MECE principle and therefore, if followed correctly, it should lead you to the cause.
Often a case will require you to identify the root cause of an issue and then subsequently recommend solutions. In this scenario it is likely that a bucket framework will be required for the solution section.
A profitability question will normally contain a sentence such as “PepsiCo has experienced declining profits” and therefore should be easily recognisable. Any case involving profits or one of its components (revenues and costs) will require a profitability framework.
Three equations to learn:
Profits = revenue – costs
Revenue = units x price
Costs = Variable costs + Fixed costs
Profits = revenue – costs
This is the overarching equation that you are looking at but as always you must dig deeper into each component of the equation to find the crux of the issue.
Revenue = units x price
Units can be increased by increasing the number of customers buying the current products (usually sales & marketing) or by increasing the number of products purchased by the current customer base (upselling).
Increasing the price of a product is usually the quickest way to increase profits but this will effect the number of units that can be sold at that price, the magnitude of the effect will depend on the elasticity of demand and alternatives available to the consumer.
Costs = variable costs + fixed costs
To increase profits variable costs can be reduced by reducing the costs of inputs per unit. Increasing buying power or increasing efficiency on a per unit basis, such as automating steps of the manufacturing process, are ways of achieving this.
Fixed costs can be reduced by removing unnecessary costs or by maximising the efficiency of current resources. Relocating the office to a cheaper location is an example of reducing fixed costs directly and increasing manufacturing production to 100% from 80% capacity would reduce the fixed cost per unit.
2) General framework
Developed on a framework made popular by Victor Cheng, this general purpose framework is capable of being adapted to the majority of case interview questions. This framework can be an alternative to the growth and market entry frameworks below if you are short of preparation time and cannot learn all the suggested frameworks.
This case interview framework primarily serves as a checklist to ensure you cover all the relevant elements in the case. It is still important to remain disciplined and methodical by exhausting each point before moving onto the next.
Useful mnemonic: Whales Wave With Police Constables
Who – the demographic of the customer base e.g age, gender, individuals, businesses etc.
What – the products they are buying and reason for buying this product e.g stapler to help organise paperwork
Where – the location of the customer base e.g UK, Europe, global
Price – the prices that customers have been paying
Consumer risk – how concentrated are these customers, what effect will losing certain customers have on total revenues? (Usually fewer customers = higher risk)
Useful mnemonic: Every Dog Is Four
Expertise – What the client is capable of and where their limitations are e.g great at manufacturing clothes cheaply but bad at luxury design?
Distribution channels – How is the client getting their product in front of customers? e.g wholesale, retail, direct to consumer, e-commerce etc.
Intangibles – does the client possess anything intangible that may effect the strategic decision? such as strong brand recognition or intellectual property.
Financial Situation – what financial resources does the client have to make the necessary investments or absorb the cost if the project fails?
Useful mnemonic: Why Eight Children Started Laughing
What – the details of the product the client sells
Elasticity of demand – how much of a necessity is the product to consumers? For example, petrol has high elasticity of demand for those with petrol cars it’s a necessity.
Compliments – are there any existing compliments to the product? e.g a phone case compliments a phone
Substitutes – are there any indirect competitors (especially emerging ones) such as tablets were to the laptop market (different products competing for the same constumers).
Lifecycle – how long does the product last? When will consumers be purchasing again? E.g a sandwich may have a lifecycle of 24 hours but a car more like 5 years.
Useful mnemonic: My Children Tried Saying Rebellious
Market share – the breakdown of competitors and their respective market shares of the target market.
Competitor observations – the competitors response to the same situation or anything notable in how they differ from the client.
Threat of new entrants – what is going to prevent another entrant to the market and what effect would this have?
Supplier risk – how concentrated are the suppliers, what effect would losing the current supplier have? (usually few suppliers = higher risk)
Regulations – are there any regulations that have or will have an effect on the client?
3) Pricing framework
Whilst pricing cases are less common it's sensible to know at least the basics of pricing strategies. Without the basics it would be easy to flunk the case unnecessarily. The three common pricing strategies are cost-based, value-based and competitor-based.
Cost based pricing: The addition of a target profit margin to the full unit cost.
Value based pricing: The value that the product provides to the consumer. Usually worked out via a cost saving, additional benefits over and above existing products or similar.
Competitor based pricing: Taken from what competitors are charging and what this product offers in comparison.
4) Market entry framework
This market entry case interview framework is a development of the general framework, it places more emphasis on the strategy of understanding the target market and market capture. It is still possible to answer these questions with the general framework but it is likely to convey a lack of originality to the interviewer.
Market entry questions usually explicitly state the intentions to enter a new market such as “Bosch is looking to enter the South American market”, making them easily recognisable.
Useful mnemonic: Small Childish People Prefer Marrying Red-heads