A Career In Management Consulting

A Career in Management Consulting

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Consulting is an appealing career choice for many graduates.

Consultants have the potential to travel with work, network with Fortune 500 executives, earn six figure salaries, develop high-level transferable business skills, and benefit from lucrative exit opportunities.

What’s not to like?

Well, for all its benefits, the life of a consultant is not necessarily a bed of roses.

Consultants can be placed under a lot of pressure, required to work extremely long hours, spend endless nights in lonely hotel rooms, and face the continual threat of redundancy either due to an economic downturn or the firm’s ‘up or out’ policy.

Before you embark on a career in management consulting, it is worth taking some time to understand the consulting industry and whether the requirements of the industry are likely to be a good fit with your personality and goals for the future.

[For more information on the management consulting industry, please download “The HUB’s Guide to Management Consulting“.]

How To Deal With Rejection

Dealing with Rejection

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If you have gone through the consulting interview process and are not offered a position with your target firm, then you should find out why.

There are two reasons this is important.

Firstly, getting specific feedback on your performance is the only way you can learn and improve.

Secondly, you may discover that the firm has formed an inaccurate opinion of you.  It is usually impossible to transform a rejection into an offer, but you really have nothing to lose.

If you believe that you were very close to getting an offer, then you may want to try proposing a compromise. You could offer to work for free, or on a trial basis rather than in a permanent full time position.

[For more information on consulting interviews, please download “The HUB’s Guide to Consulting Interviews“.]

Negotiating An Offer Of Employment

Negotiating An Offer Of Employment 3

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If you have received an offer of employment from the consulting firm of your choice, you may still want to negotiate the terms of the offer.

How should you go about doing this?

Use your bargaining power

Your ability to negotiate the terms of your offer depends on how much bargaining power you have. The consulting industry is currently experiencing growth in various markets, and so it may be possible to negotiate a more favorable employment contract.

Whatever the state of the economy, it is worth considering negotiating the terms of your offer. After you accept your offer of employment you will have virtually no bargaining power, and so the time for negotiation is beforehand.

If you are friendly and businesslike then negotiating needn’t create a negative impression, on the contrary, it demonstrates that you have a keen business sense and a healthy level of self confidence.

Obtain written confirmation

You need to obtain written confirmation of all terms that you successfully negotiate.

Terms to negotiate

There are a number of offer terms that you may want to negotiate, these include:

  1. Office location;
  2. Start date;
  3. Compensation;
  4. Starting position;
  5. Annual leave; and
  6. Offer response deadline.

1. Office location

To negotiate a change of office location, a first step might be to explain the reason for your request to the recruitment manager. If they agree to look into the matter, make sure you agree on a date to follow up with them.

If your request is turned down, try to identify a person in your target office who can vouch for the transfer. When you find someone, contact them to explain your situation and ask if there’s anything he or she can do to help you. Offer to meet with them in person.

2. Start date

In a weak economy, you may be able to negotiate a later start date. This benefits the firm by allowing them to start paying your salary later than planned.

3. Salary and bonus

Given the strong growth of the consulting industry, it may be possible to negotiate an improved remuneration package.

The best form of leverage is to have another offer that pays more money. If you are an MBA or lateral hire and your previous salary was higher then you can use this as leverage. You may be able to convince the recruiter that you are being undervalued.

4. Starting position

If the job offer is for a position at a lower level than you believe is justified given your qualifications and experience then you can ask for higher starting position. If this doesn’t work, then you might want to ask for a shorter performance review period, which will allow you to prove yourself and get promoted sooner.

5. Annual leave

If you don’t like the amount of annual leave provided, then you might want to try asking for more. If that fails, ask about the firms unpaid leave policy.

6. Offer response deadline

Consulting firms are in a war for talent and can sometimes give applicants an “exploding offer”, which expires within a very short time period.

Exploding offers are designed to pressure applicants to accept an offer as soon as possible in order to minimise the risk that the applicant accepts a more favourable offer from another employer.

If you need an extension to the offer deadline, ask for it. It’s a very common thing to get more time to make a decision.

[For more information on consulting interviews, please download “The HUB’s Guide to Consulting Interviews“.]

Accepting An Offer Of Employment

Accepting An Offer Of Employment

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If you are offered a position with a consulting firm (and are happy with the terms of the offer) then feel free to accept it.

You can talk to the recruitment management to let them know your decision, and you will also need to sign, date, and return a copy of the offer letter.

Be sure to make a copy for your records.

If you have successfully negotiated any terms of the offer, then you need to capture the additional or amended terms in writing.

Ideally the firm should provide you with an updated offer letter reflecting the agreed terms of the offer.

However, the recruitment manager may conveniently forget to provide this, in which case you should set out the agreed terms in an email and send it to the recruitment manager.

The firm may try to wriggle out of its obligations later, and so you need to have written evidence of what was agreed.

[For more information on consulting interviews, please download “The HUB’s Guide to Consulting Interviews“.]

After The Interview

After The Interview

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We have talked at length all year about consulting interviews, and in this post we provide three (3) thoughts on what to do after the interview comes to an end.

  1. Confirming the next step: To find out about the next step in the recruitment process, talk to the recruitment manager (this will probably be someone other than your interviewers).
  2. Thank you email: It is a nice courtesy to send a short thank you email to your interviewer the day after your interview. The note should thank the interviewer for her time, remind her of a few key points that you discussed, and state again why you are genuinely interested in working with the firm.
  3. Following up: If the date on which you expected to hear back from the firm has passed, then feel free to call the recruitment manager to follow up on the status of your application.

[For more information on consulting interviews, please download “The HUB’s Guide to Consulting Interviews“.]

Practice Case Questions

Practice Case Questions

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If you want to practice case questions, I highly recommend Marc Cosentino’s book Case in Point.

You can also access sample case questions from various consulting clubs here, and from the following consulting firm websites:

  1. McKinsey & Company;
  2. Bain & Company;
  3. Oliver Wyman;
  4. Deloitte;
  5. A.T. Kearney;
  6. Accenture; and
  7. L.E.K. Consulting.

[For more information on consulting interviews, please download “The HUB’s Guide to Consulting Interviews“.]

Product Market Expansion Matrix

Product Market Expansion Matrix

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The product-market expansion matrix may prove useful in the consulting case interview and is relevant when considering growth strategies. It might be used on a standalone basis or as part of a larger profitability framework.

Product Market Expansion Matrix

There are four ways that a company can pursue growth:

  1. Market penetration: A strategy to increase sales to existing customers and increase market share. Market penetration can be pursued through a combination of initiatives relating to pricing, product, placement and promotion (see “Four P’s Framework”).
  2. Market development: A strategy to sell existing products to new markets which might include new regions, customer segments, or distribution channels.
  3. Product development: A strategy to sell new products to existing customers to increase share-of-wallet.
  4. Diversification: A strategy to develop new products for new markets. This is the highest risk option, and so it will make sense to look for markets with strong market growth and high levels of industry attractiveness (see “Porter’s Five Forces”).

[For more information on consulting interviews, please download “The HUB’s Guide to Consulting Interviews“.]

Outsourcing Matrix

Outsoucing Decision Matrix

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The outsourcing matrix may prove useful in the consulting case interview, either as a standalone framework or as part of a larger profitability framework.

With the view to reducing costs, there are three questions that a firm would do well to consider:

  1. How long will it take to reduce major cost drivers?
  2. Are the activities strategically important?
  3. To what extent do the activities contribute to operational performance?

Outsourcing Matrix

A company will want to eliminate or outsource costly activities that have low strategic importance. If the activity has a low contribution to operational performance it can be eliminated, and if it has a high contribution to operational performance it should be outsourced.

A company will want to retain control of activities that have high strategic importance. This can be done by pursuing business as usual or by forming a strategic alliance or increasing efficiency.

Common cost reduction techniques include:

1. Procurement

  • Consolidate procurement or renegotiate supply contracts.

2. HR Management

  • Reduce labour costs through decreasing salaries, training, overtime, benefits and healthcare, introducing employee stock ownership, and right sizing.

3. Technology Development

  • Use IT and digital technology to reduce communication and organisational costs.
  • Employ more advanced production technology.

4. Logistics

  • Partner with distribution companies (e.g. FedEx).

5. Operations

  • Outsource manufacturing to a lower cost jurisdiction (e.g. China/India/other).
  • Improve the utilisation rate of plant, property and equipment.
  • Relocate headquarters to lower cost city, region or country.

6. Finance

  • Reduce working capital including inventory and accounts receivable.
  • Refinance outstanding debt.
  • Divest non-core assets.

[For more information on consulting interviews, please download “The HUB’s Guide to Consulting Interviews“.]

McKinsey 7 S Model

McKinsey 7 S Framework 2

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While you may not directly use the 7 S Model in the consulting case interview, it will give you a deeper understanding of how to examine the inner workings of an organisation, identify strengths and sources of competitive advantage, as well as weaknesses and reasons why an organisation may not be operating effectively.

The 7 S Model can also provide a guide for organisational change.

McKinsey 7 S Model

The seven (7) factors considered by the 7 S Model include:

  1. Shared values refer to the values that are widely practiced within an organisation and form the company’s core guiding principles.
  2. Strategy refers to the plans that a company has for gaining a competitive advantage (e.g. low cost; product differentiation; new product development; entering new markets).
  3. Skills refer to the competencies of the organisation, its staff and management.
  4. Structure refers to the way in which an organisation’s people and business units relate to each other. This includes organizational structure, communication channels, and chain of command.
  5. Staffing refers to recruitment, selection, training, development, and management of talent.
  6. Style refers to the work culture, leadership style of upper management and the way things are done.
  7. Systems refers to the organisation’s processes and procedures for things like budgeting, communication, recruitment, compensation, and performance reviews.

[For more information on the consulting interview, download “The HUB’s Guide to the Consulting Interview“.]

BCG Growth/Share Matrix

Cash Cow

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While it may not be a core framework for solving consulting case questions, the BCG Growth Share Matrix can help to broaden your understanding of how a company might want to allocate cash between products and business units.

The framework is based on the idea that the amount of cash a product uses is proportional to the rate of growth of that product in the market, and the generation of cash is a function of market share.

To be successful, the story goes, a company should have a portfolio of products with different growth rates and different market shares. Money generated from high-market-share products can then be used to develop high-growth products.

BCG Matrix

Under the BCG matrix, products are classified into four types:

  1. Stars are leaders in high growth markets. Stars grow rapidly and therefore use large amounts of cash. Stars also have a high market share and therefore generate large amounts of cash.
  2. Cash Cows are highly profitable and require low investment because they are market leaders in a low-growth market.
  3. Question Marks are low market share high growth products, and almost always require more cash than they can generate.
  4. Dogs are low market share low growth products. BCG refers to these products as “cash traps”. They require little cash but also generate little cash.

[For more information on consulting interviews, please download “The HUB’s Guide to Consulting Interviews“.]

Value Chain Analysis

Value Chain Analysis 2

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Value Chain Analysis is another tool that may prove useful during the consulting case interview. It can be used to analyse the cost structure of a company as part of a declining profitability case, or to analyse the supply chain as part of an operations case.

Value Chain

To understand which activities provide a company with a competitive advantage, either through cost advantage or product differentiation, it is helpful to separate operations into a series of value-generating activities referred to as “the value chain”.

Value Chain Analysis involves identifying all of the important activities in which a company engages and then determining which ones give the company a competitive advantage. By doing this, a company can:

  1. Determine which activities are best undertaken internally and which ones are able to be outsourced or eliminated;
  2. Identify and compare strengths and weaknesses with the competition; and
  3. Identify synergies between activities.

The primary value chain activities include:

  1. Inbound Logistics: Receiving and storing raw materials;
  2. Operations: Manufacturing products and services; the way in which inputs are converted into final products;
  3. Outbound Logistics: Inventory storage and distribution to customers;
  4. Marketing & Sales: Identification of customer needs and preferences, marketing and sales generation;
  5. Service: Interacting with and supporting customers.

[For more information on consulting interviews, please download “The HUB’s Guide to Consulting Interviews“.]

Four P’s Analysis

Four P's Framework

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Four P’s Analysis is a framework that may prove useful for solving consulting case questions.

It can be used to evaluate the marketing strategy for a product.

1. Price

The pricing strategy that a company employs will affect its market share and profitability. There are three key pricing strategies to consider.

  1. Competitive pricing: How do prices compare with the competition? Is the pricing appropriate given the product’s quality and relative position within the market?
  2. Cost based pricing: What is the company’s cost structure? What percentage of costs are fixed and variable? A company that has high fixed cost and low variable costs will benefit from economies of scale and so may want to lower prices to increase market share.
  3. Value based pricing: Is the product a commodity or differentiated? Do different customer segments have a different willingness to pay? Are customers price sensitive (see “Price elasticity of demand”)? If prices are changed, how will this affect sales volume and product perception?

2. Product

Is the product a low cost commodity or differentiated? Products can be differentiated where they differ in quality, features, availability or branding.

How does the product compare with what the competition is offering? Are their viable substitutes? Do customers face high switching costs?

3. Promotion

How does the company promote its products (advertising, direct sales, indirect sales, trade promotions, public relations)? Is the company reaching its target customers? Can the company afford to increase its marketing budget?

Understanding the customer’s buying decision process can help a firm decide where to influence the customer’s purchase decision.

Customer Buying Process

4. Place

What markets and market segments does the company serve? How does this compare to the markets and market segments served by the competition?

What distribution channels does the company use to get products to the customer (mail order, online store, factory outlet, retail store, supermarket, department stores, or network marketing)?

Are existing channels consistent with the company’s overall strategy? Are there other channels that the company could use?

[For more information on consulting interviews, please download “The HUB’s Guide to Consulting Interviews“.]

Porter’s Five Forces

Porter's Five Forces 2

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The Porter’s Five Forces framework is used to determine the competitive intensity and attractiveness of an industry, and is relevant in the context of entering a new market, M&A, or starting a new business.

The intensity of competition will depend on the strength of the five competitive forces, however the significance of the forces will vary by industry.

1. Existing competition

How strong is the rivalry among existing firms?

Factors contributing to competitive rivalry include:

  • Increased number of firms;
  • Slower market growth;
  • Low product differentiation;
  • Low switching costs;
  • Industry wide excess capacity;
  • High fixed costs; and
  • High exit barriers.

2. Substitutes

What is the price performance of substitutes? Do customers have high switching costs?

3. Barriers to entry

What is the threat posed by new entrants?

Barriers to entry might include capital requirements, economies of scale, network effects, government policy, switching costs, access to suppliers, access to distribution channels, product differentiation, and proprietary product technology.

4. Supplier bargaining power

How much bargaining power do suppliers have?

5. Customer bargaining power

How much bargaining power do customers have?

[For more information on the consulting interview, download “The HUB’s Guide to the Consulting Interview“.]

Three C’s Framework

Three C's Framework

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The Three C’s Framework may prove extremely valuable for consulting case questions.

It can help to assess the business situation in the context of entering a new market, M&A, product development, and starting a new business.

It involves examining customers, competition, and the company.

1. Customers

Eight (8) factors to consider when examining the customer.

1. Customer Identification

In general terms, who is the customer?

In trying to identify the customer, remember that the person who makes the purchase decision, the person who pays (the customer), and the end user may all be different people. For example, a doctor may prescribe medicine, paid for by an insurance company, and used by the patient.

2. Customer Segmentation

Customer segmentation can make it easier to understand customer needs and preferences, and the size and growth rate of different revenue streams.

It may make sense to segment customers by:

  1. Age group;
  2. Gender;
  3. Income level;
  4. Employment status;
  5. Distribution channel;
  6. Region;
  7. Product or product line;
  8. New versus existing customers; or
  9. Large versus small customers.

3. Size

How big is the market? How big is each customer segment?

4. Growth

How fast is the market growing? What is the growth rate of each customer segment?

5. Customer Preferences

What do customers want? Do different customer segments want different things? Are the needs and preferences of customers changing over time?

6. Willingness to Pay

How much is each customer segment willing to pay?

How price sensitive is each customer segment?

7. Bargaining Power

What is the concentration of customers in the market relative to the concentration of firms?

Do customers face high switching costs?

8. Distribution

What is the best way to reach customers (mail order, online store, factory outlet, retail store, supermarket, department stores, or network marketing)? Does each customer segment have a preferred distribution channel?

2. Competition

Competition can come from firms within an industry, or from firms in other industries who produce substitutes.

Competition can also come from suppliers and customers within the supply chain who exert bargaining power to extract a larger share of industry profits.

Eleven (11) factors to consider when examining the competition.

1. Competitor Identification

Who are the company’s major competitors? What products and services do they offer?

Who are the company’s indirect competitors? That is, which firms are producing substitutes?

2. Competitor Segmentation

Is it possible to segment the competition? This might be done by distribution channel, region, product line, or customer segment.

3. Size and Concentration

What are the revenues and market shares of major competitors? What is the concentration of competitors in the industry?

4. Performance

What is the historical performance of the competition? Relevant performance metrics might include profit margins, net income, and return on investment.

5. Industry Lifecycle

Where is the industry in its lifecycle? Early stage, growth, maturity or decline?

6. Industry Drivers

What drives the industry: brand, product quality, scale, or technology?

7. Competitive Advantage

What is the competition good at? How sustainable are these advantages?

What are their weaknesses? How easily can these weaknesses be exploited?

8. Competitive Strategy

What competitive strategy is the competition pursuing? Is the competition producing products that are low cost or differentiated? What customer segments is the competition targeting?

What is the competition’s pricing strategy, distribution strategy and growth strategy?

9. Barriers to Entry

The threat posed by potential competitors depends on the level of barriers to entry.

Barriers to entry make it more difficult for potential competitors to enter, and so reduces competitive rivalry and allows existing firms to maintain higher prices than would otherwise be possible.

Key barriers to entry might include capital requirements, economies of scale, network effects, government policy, switching costs, access to suppliers, access to distribution channels, product differentiation, and proprietary product technology.

10. Supplier bargaining power

Factors that affect the bargaining power of suppliers might include:

  1. The number of available suppliers and the strength of competition between them;
  2. Whether suppliers produce homogenous or differentiated products;
  3. The brand recognition of a supplier and its products;
  4. The importance of sales volume to the supplier;
  5. The cost to the firm of switching suppliers;
  6. The availability of supplier substitutes; and
  7. The threat of forward integration by the supplier relative to the threat of backward integration by firms in the industry.

11. Customer bargaining power

Factors that affect the bargaining power of customers might include:

  1. The number of customers;
  2. The volume a customer demands relative to a firm’s total output;
  3. The availability of substitutes;
  4. Customer switching costs;
  5. Access to product comparison information; and
  6. The threat of backward integration by the customer relative to the threat of forwards integration by firms in the industry.

3. Company

Ten (10) factors to consider when examining the company.

1. Performance

What is the historical performance of the company? What is its market share?

2. Competitive Advantage

What are the company’s resources and capabilities? How sustainable are the company’s advantages? What are the company’s weaknesses and can they be remedied?

3. Competitive Strategy

What is the company’s competitive strategy? Does the company focus on producing products that are low cost or differentiated? Which customer segments does the company target?

4. Products

What does the company offer and how does it benefit customers? Does the product have any downsides or side effects?

Is the product a commodity or differentiated?

How does the company’s product offering compare with the competition? Are there substitutes available?

Where does the product fall within its product lifecycle?

What is bundled with the product? For example, customer service, warranties, or spare parts. Are there opportunities to bundle or unbundle the product in order to increase sales volume?

5. Finances

If the company is considering a certain course of action, does it have sufficient funds available to undertake the project? What’s the break even analysis?

6. Cost Structure

Consider the cost structure of the business. This can be done by segmenting costs into value chain activities: inbound logistics, operations, outbound logistics, sales & marketing, customer service.

Value Chain

Consider also fixed costs and variable costs. Have there been any significant changes in the company’s cost drivers? How do costs compare to the competition?

7. Organisational Cohesiveness

Understanding a company’s inner workings can be important since competitive strategies can fail if they conflict with a firm’s general way of doing business. Analysing the inner workings of an organisation can be done by using the McKinsey 7 S Model.

8. Marketing

What does the company stand for? How do customers perceive the company and its products? How does the company communicate with customers?

9. Distribution Channels

What distribution channels does the company use to reach customers (mail order, online store, factory outlet, retail store, supermarket, department stores, or network marketing)?

10. Customer Service

How does the company interact with and support customers? Does the company have a customer loyalty program?

[For more information on consulting interviews, please download “The HUB’s Guide to Consulting Interviews“.]

Profitability Framework

The profitability framework is probably the most important framework for solving consulting case questions

Profitability Framework

Profit equals revenue minus cost.

1. Revenue

Revenue is normally thought of as being a function of price per unit and units sold.

Declining revenue can derive from a fall in prices or a reduction in units sold, and can be examined in four steps.

Step 1: Segmentation

What are the major revenue streams? It will typically be a good idea to segment units sold, and this might be done by:

  1. Product;
  2. Product line;
  3. Distribution channel;
  4. Region;
  5. Customer type (new/old, big/small); or
  6. Industry vertical.

Step 2: Examination

What percentage of total revenue does each revenue stream represent? Compare current and historical figures to identify how these percentages have changed over time.

Step 3: Diagnosis

What is the underlying cause of the problem?

Step 4: Response

Develop a strategic response.

1.1 Diagnosis

If faced with declining prices or volume, factors to consider include the following.

1. Macro Economy

  • PEST Analysis: Political upheaval; Economic decline; Socio-cultural factors; Technology. Have there been any recent or impending changes?

2. Customers

  • Market growth: Has market growth slowed forcing competitors to compete over market share?
  • Customer needs and preferences: Have customer needs and preferences changed?
  • Distribution Channels: What channels are used to reach customers? Has there been a change in the cost effectiveness of these channels?
  • Price Discrimination: Can the company distinguish between customers and charge different prices to different customer segments?

3. Competition

  • Rivalry: Have competitors lowered their prices? How does the company’s product mix, product quality, and cost structure compare to the competition?
  • Substitutes: Has the price performance of substitutes improved?
  • Barriers to entry: Has it become easier for new competitors to enter the industry?
  • Buyer bargaining power: Has there been an increase in customer bargaining power?

4. Company

  • Market Power: Does the company have market power (product differentiation, proprietary technology, economies of scale, network effects)?
  • Products: What products and product mix does the company offer? How do these compare to the competition? Is there something different about the products that might allow the company to raise prices?
  • Value chain analysis: Consider value chain activities: access to raw materials; operating capacity; inventory handling and distribution.

1.2 Response

Declining prices

In response to declining prices, there are three pricing strategies to consider.

  1. Competitive pricing: How do prices compare with the competition? Is the pricing appropriate given the product’s quality and relative position within the market? How is the competition likely to respond to the firm’s pricing strategy?
  2. Cost based pricing: What is the company’s cost structure? What percentage of costs are fixed and variable? A company that has high fixed cost and low variable costs will benefit from economies of scale and so may want to lower prices to increase market share.
  3. Value based pricing: Is the product a commodity or differentiated? Do different customer segments have a different willingness to pay? Are customers price sensitive (see “Price elasticity of demand”)? If prices are changed, how will this affect sales volume and product perception?

Declining sales volume

Faced with falling sales volume, there are four growth strategies that a business might choose to employ: market penetration, market development, product development, and diversification.

Product Market Expansion Matrix

  1. Market penetration: A strategy to increase sales to existing customers and increase market share. Market penetration can be pursued through a combination of initiatives relating to pricing, product, placement and promotion (see “Four P’s Analysis”).
  2. Market development: A strategy to sell existing products to new markets which might include new regions, customer segments, or distribution channels.
  3. Product development: A strategy to sell new products to existing customers to increase share-of-wallet.
  4. Diversification: A strategy to develop new products for new markets. This is the highest risk option. Look for markets with strong market growth and high levels of industry attractiveness (see “Porter’s Five Forces”).

2. Costs

The third driver of declining profitability (after prices and volume) is rising costs.

2.1 Diagnosis

Examine the cost structure of the business to locate the source of rising costs. This might be done by segmenting costs into value chain activities: inbound logistics, operations, outbound logistics, sales & marketing, customer service.

Consider also fixed costs and variable costs. Have there been any significant changes in the company’s cost drivers? How do costs compare to the competition?

2.2 Response

In responding to rising costs, there are three questions that a firm should consider:

  1. How long will it take to reduce major cost drivers?
  2. Are the activities strategically important?
  3. To what extent do the activities contribute to operational performance?

Outsourcing Matrix

A company will want to eliminate or outsource costly activities that have low strategic importance. If the activity has a low contribution to operational performance it should be eliminated, and if it has a high contribution to operational performance it should be outsourced.

A company will want to retain control of activities that have high strategic importance. This can be done by forming a strategic alliance or increasing efficiency.

If a company wants to increase efficiency, then it will need to find ways to reduce costs.

Common cost reduction techniques include:

1. Procurement

  • Consolidate procurement or renegotiate supply contracts.

2. HR Management

  • Reduce labour costs through decreasing salaries, training, overtime, benefits and healthcare, introducing employee stock ownership, and right sizing.

3. Technology Development

  • Use IT and digital technology to reduce communication and organisational costs.
  • Employ more advanced production technology.

4. Logistics

  • Partner with distribution companies (e.g. FedEx).

5. Operations

  • Outsource manufacturing to a lower cost jurisdiction (e.g. China/India/other).
  • Improve the utilisation rate of plant, property and equipment.
  • Relocate headquarters to lower cost city, region or country.

6. Finance

  • Reduce working capital including inventory and accounts receivable.
  • Refinance outstanding debt.
  • Divest non-core assets.

[For more information on the consulting interview, download “The HUB’s Guide to the Consulting Interview“.]

Case Math

Case Math

(Source: Flickr)

In this post we outline some mathematical concepts that may prove useful for solving consulting case questions.

1. Break Even Analysis:

Relevant when trying to decide whether to launch a new product or invest in a project with high fixed costs.

Break Even Analysis

2. Customer Lifetime Value:

Customer lifetime value is a prediction of the entire future value that a company expects to derive from its relationship with a customer. It is a useful tool for a company that is trying to decide which customer segments to target and how much to spend on customer acquisition.

Customer Lifetime Value

3. Net Present Value:

The NPV of an investment is the present value of the series of expected future cash flows generated by the investment minus the cost of the initial investment.

Net Present Value

Where r = discount rate; CFt = expected cash flow in year t; CFn = expected cash flow in final year; g = long term cash flow growth rate.

4. Perpetuity:

A perpetuity is a constant stream of identical cash flows with no end.

Perpetuity

5. Price elasticity of demand:

Price elasticity of demand is a measure of the responsiveness of quantity demanded to a change in price, and is relevant when formulating pricing strategy.

Price elasticity of demand

If demand is elastic (Ed > 1) then changes in price will have a relatively large effect on the quantity demanded, and total revenue will rise if prices are lowered.

If demand is inelastic (Ed < 1) then changes in price will have a relatively small effect on the quantity demanded, and total revenue will rise if prices are raised.

6. Product life cycle:

The product life cycle is relevant when calculating the expected lifetime revenue of a product.

Product Life Cycle Product Revenue 2

7. Profit Margin:

Gross Profit Margin: Gross profit margin measures how much of every dollar of sales revenue remains after subtracting the cost of goods sold.

Gross Profit Margin

Net Profit Margin: Net profit margin measures how much out of every dollar of sales revenue a company actually keeps. Net profit margin is useful when comparing companies in similar industries. A higher net profit margin indicates a more profitable company that has better control over its costs compared to its competitors.

Net Profit Margin

Contribution Margin: A cost accounting concept that allows a company to determine the profitability of individual products.

Contribution Margin

8. Return on Investment:

ROI is a performance measure that a company can use to evaluate the efficiency of an investment or to compare a number of different investments.

Return on Investment

9. Rule of 70:

The Rule of 70 is a simple rule of thumb that can be used to figure out roughly how long it will take for an investment to double, given an expected growth rate.

The rule can be described by the following equation:

Rule of 70

 

[For more information on the consulting interview, download “The HUB’s Guide to the Consulting Interview“.]

Sample Consulting Case Questions

Sample Consulting Case Questions

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Below we provide a selection of sample consulting case questions.

The questions are broken down into seven (7) question types to make them easier to digest.

1. Declining Profitability

  1. Our client is eBay. Its share price fell from $310 to $200 per share on reports of declining profits. What’s going on and how can we turn this around?
  2. A large American beverage company acquired a fruit juice company for $350 million five years ago with the goal to increase revenues tenfold. Revenues have instead fallen 50% to $20 million. What’s going on and how can we turn this around?
  3. Our client is a mid-sized retail bank in Kazakhstan. The bank has achieved sustained revenue growth over the last two years but its profits have consistently declined. What is causing the decline in profits? What can we do about it?

2. Entering a New Market

  1. Your client is a low-cost airline headquartered in Philadelphia with frequent service to cities along the East Coast of the United States. The CEO is interested in expanding service into a small town in the Midwest; let’s call it Greenville. What is your recommendation?
  2. A large Korean electronics company is thinking about entering the market for tablet computers. Is this a good idea?
  3. A South Korean company is acquiring a U.S. smart phone maker. What factors do they need to take into account?

3. Pricing Strategy

  1. The CEO of a large Asian electronics firm has come out with a new smart phone, which is much like the iPhone. How should it price this product?
  2. Dr Pepper is trying to boost profitability by raising prices. It’s focusing on supermarkets. How is raising prices likely to affect profitability? Should it go ahead with the plan?
  3. Toyota has invented a car with incredible durability, it can be driven a thousand times further than cars currently on the market before needing to be serviced. The CEO asks you, “How should Toyota price this car?”

4. Growth Strategy

  1. Our client is the Museum of Fine Arts in Boston. They want to develop a growth strategy for the next five years. What would you advise them to look at, and what are your recommendations for growth?
  2. You have been brought in as the CEO of Blackberry. The company started making handheld wireless devices in 1999 and gained substantial market share in the initial smart phone market prior to the release of the iPhone in 2007. The company missed the trend towards touchscreen smart phones and has fallen into serious financial difficulty. How can we regain market share, and return Blackberry to its former glory?
  3. Emirates Airline is considering signing an agreement with Ben and Jerries Ice-cream, which would allow them to serve several flavours of ice cream on Emirates flights. Is it a good idea for Emirates to sign this agreement?
  4. Virgin Galactic has developed a new rocket that can take off and land like a normal plane. Virgin Galactic wants to give customers the opportunity to see the earth from space and experience low gravity on a five hour flight. The prototype rocket will cost $1 billion to produce. Each additional rocket will cost $100 million.
    • Estimate the size of the global market
    • What price should Virgin Galactic charge for a ticket?
    • How many rockets should it produce?
    • Should it sell rockets to competitors?
  5. P&G has just discovered a new lightweight metallic compound that could be used to produce metal containers like soft drink cans. What should they do with it?

5. Operations

  1. Coca Cola has a bottling plant in Mumbai. Over the past three months, inventory has tripled and customer complaints have doubled. What should the company do?
  2. Cabana Surfboards manufactures surfboards at a factory in California. It is currently summer, and Cabana is having trouble meeting demand. Cabana’s surfboards are distributed through surf shops located near popular tourist beaches and, in recent years, Cabana has developed a strong reputation among first time surfers. What should the company do to keep up with demand?
  3. A leading financial services company is trying to reduce operating expenditures. How can it achieve its savings target?

6. Competitive Response

  1. CanadaCo, the largest discount retailer in Canada, currently holds the dominant market share in the industry. USCo, the largest discount retailer in the United States, has decided to expand into Canada by purchasing CanadaCo’s competition. How should the CEO of CanadaCo respond?
  2. Our client, let’s call them AcmeCo, is a specialty shoe manufacturer with retail stores in New York, San Francisco and London. AcmeCo has discovered that Nike is planning to enter its segment of the market. What should it do?
  3. Our client is Kellogg’s, a leading international manufacturer of branded cereals. Over the past five years, supermarkets and distributors in America have started selling private label goods including private label cereals. Private label goods are produced by manufacturers and sold by retailers and supermarkets directly to the end user. The private label trend has started to impact Kellogg’s market share. How should Kellogg’s respond to this competitive threat?

7. Turnarounds

  1. Radioshack, an American consumer electronics giant of yesteryear, faced chaotic trading on Wednesday as analysts predicted the company would report its 10th straight quarter of losses. Assuming RadioShack averts bankruptcy and achieves a successful refinancing, what should the strategy be to turnaround and save this iconic company?

[For more information on consulting interviews, please download “The HUB’s Guide to Consulting Interviews“.]

Concluding A Consulting Case Question

Concluding a Consulting Case Question

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At the end of a case question it is important to provide a summary of the problem and a set of actionable recommendations that answer the question.

Recommendations should be justified with the key findings that you had been noting down as you progressed through the case.

For example, you might say something like “the company is trying to decide whether to enter the Canadian market. Our recommendation is that the company should enter this new market because they will capture significant market share, face limited competition, and break even within 3 years.”

[For more information on consulting interviews, please download “The HUB’s Guide to Consulting Interviews“.]

Tackling A Consulting Case Question

Tackling the Case Interview

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The second stage of a consulting case question, after setting it up, is to solve the problem.

Here are six (6) tips for successfully tackling a case question:

  1. Find the source of the problem – You might get asked a question such as “Profits have declined, what should we do?” Before diving head long into an analysis of the company’s revenue and cost drivers, try to better understand the source of the problem. What’s been happening in the economy? Is the problem company specific or industry wide?
  2. Find the trend – If you are given figures for a particular year, it is important to understand how things have changed over time. You might say, “I understand that industry growth for 2015 was 10%, how does that compare with growth in prior years?”
  3. Break things down – Aggregate figures can hide important details. For example, you might know that total revenues have been flat. Can you segment revenues by product line, distribution channel, customer type or region? When looking at costs, can you segment by value chain activities or into fixed and variable costs?
  4. Think out loud – State your hypothesis, and state your assumptions as you progress through the case. The interviewer is trying to assess the quality of your thinking, and you can’t score points for things that you think but don’t say.
  5. Keep it simple – When doing numerical calculations, use round numbers where ever possible. For example, assume that the population of America is 300 million not 316.1 million.
  6. Highlight key findings – As you progress through the case, record key findings so that you can refer back to them later. You might do this by noting key findings on a separate piece of paper, or by circling or highlighting them as you progress through the case.

[For more information on consulting interviews, please download “The HUB’s Guide to Consulting Interviews“.]

Setting Up A Case Question

Setting Up the Case Question

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When it comes to answering a consulting case question, there are three stages to the answer: setting it up, solving it, and providing a recommendation.

The first stage is setting it up, and below we provide five (5) steps to setting up a case question:

1. Summarize the question

Give yourself time to think by writing down the question and considering the key facts. You can safely pause for up to 90 seconds or so in order to capture your thoughts on paper. When you have finished doing so, summarize your understanding of the question out loud.

2. Clarify vague information

Ask questions to help you understand the situation and clarify any unfamiliar concepts or vague information provided by the interviewer.

3. Determine the goal

Be clear about the objective of the case. Is the company concerned with maximizing profits, increasing market share, or something else? Does the interviewer want a “go/no go” decision, or a list of recommendations?

For example, you might say “From what you have told me I understand that the company wants a list of recommendations on how to maximize profits, are there any other objectives that I should be aware of?”

4. Structure the analysis

When answering a case question, structure is crucial. The interviewer wants to know not only that you can provide a coherent answer but that you can deliver your analysis in a “client friendly” way.

That means having a clear structure.

Select an appropriate framework for analysis. This will allow you to gather the right kinds of information. However, don’t nominate the framework by name, for example don’t say “I want to use the three C’s framework”. Instead, use the framework to identify the relevant issues and draw out a structure for the interviewer to see. A good way to do this is to use a tree diagram. You can then walk the interviewer through your structure and start asking for data or diving into the details.

5. State a hypothesis

If the case is broad and open ended, for example “profits have declined, what should we do?”, then it is helpful to state a hypothesis about the source of the problem.

For example, you might say “Profit is a function of revenue and costs. My hypothesis is that declining profits have been caused by falling revenue.” This will give your analysis a starting point, and allow you to drive towards a solution.

[For more information on consulting interviews, please download “The HUB’s Guide to Consulting Interviews“.]

Playing For Time In The Case Interview

Playing for Time

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If you get stuck during a case question then there are four (4) things you can do to regain momentum.

  1. If the interviewer has just given you some information then you can say something like “let me take a second to consider that information”. You can safely stay silent for up to 90 seconds or so while writing down and reviewing the key facts of the case. Although don’t take longer than you need.
  2. You can summarize where you are up to so far. Summarizing your position can help you pull your head above water and see the bigger picture. It will also buy you some time to think while you are talking.
  3. Consider the Three C’s Framework (customer, competition, company). Is there an obvious element of the case that you haven’t considered?
  4. Ask the interviewer for help. If you are truly stuck, then it is better to ask for help than to spin your wheels and create a prolonged and awkward silence.

[For more information on consulting interviews, please download “The HUB’s Guide to Consulting Interviews“.]

Purpose of the Consulting Case Question

Purpose of the Consulting Case Question

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The business case question is the cornerstone of the consulting interview, and consulting firms use it to assess a candidate for a number of qualities:

  • Structured thinking;
  • Numerical ability;
  • Communication skills;
  • Comfort with ambiguity;
  • Speed of thought;
  • Knowledge of key business concepts;
  • Enthusiasm for consulting;
  • Calm resolve under pressure; and
  • Ability to represent the firm.

As part of a case question a candidate will be required to consider a hypothetical business situation, uncover the source of the problem, develop a solution, and provide recommendations.

This process will involve presenting a structure for analysis, making a series of common-sense assumptions, and asking the interviewer clarifying questions.

A case question is not intended to test your knowledge of a particular industry, but is designed instead to test your thinking process. It is important to have a structured approach and to think out loud.

[For more information on consulting interviews, please download “The HUB’s Guide to Consulting Interviews“.]

Factors Questions

Factor Questions

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Factor questions are a type of question that you may come across in consulting interviews.

They are designed to help the interviewer see how you think, and you might be asked a question such as “What factors influence X, Y, Z?” or “What factors would you consider when A, B, C?”.

An example of a factor question is “What factors would you consider when marketing a new smart phone app?”

[For more information on consulting interviews, please download “The HUB’s Guide to Consulting Interviews“.]

Answers to Sample Brainteasers

Answers to Sample Brainteasers

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Last week we provided a list of ten (10) sample brainteasers that you might come across in consulting interviews.

If you didn’t read the post, you might want to read it before taking a look at the answers below (to read last week’s post, click here).

Answers to Sample Brainteasers

  1. A round manhole cover cannot fall through the circular opening. Circular covers don’t need to be rotated or precisely aligned when placing them. A round manhole cover can also be easily rolled.
  2. 3 socks.
  3. The digits are in alphabetical order – eight, eleven, five, four, nine, one, seven, six, ten, three, twelve, two, zero.
  4. One box.
  5. Less, you will only have $99.
  6. Read the first sentence to this question.
  7. The cabin is a cabin of a plane which crashed in the woods.
  8. 3 cages and 4 canaries.
  9. Read the question again.
  10. A match box can fit in your pocket, but it can also be used to fill the room with light.

[For more information on consulting interview, please download “The HUB’s Guide to Consulting Interviews“.]

Brainteasers

Brainteasers 4

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Brainteasers are another kind of question that you might confront in consulting interviews.

They are likely to be tricky and to require “out of the box” thinking.

Why do interviewers ask brainteasers?

Well, since clients can sometimes ask questions which have no immediate or obvious answer, the goal of the brainteaser is to assess how well you deal with ambiguity under pressure.

Here is a list of six (6) sample brainteasers to give you an idea of what you might come across in your consulting interview (answers will be posted next week).

  1. Why are manhole covers round?
  2. There are 6 blue socks and 6 purple socks mixed randomly together in your sock drawer. It is dark, and you cannot tell them apart. What is the smallest number of socks that you need to take from the draw to be sure you have one matching pair?
  3. Is there anything interesting about the following sequence of numbers? 8, 11, 5, 4, 9, 1, 7, 6, 10, 3, 12, 2, 0
  4. You have three boxes of eggs. The boxes contain (1) big eggs, (2) small eggs, or (3) a mixture of big and small eggs. The boxes are labelled: Big, Small and Mixed but every box is labelled incorrectly. What is the least number of boxes that you will need to open to know which eggs are in which box?
  5. You invest $100 today in a company. The share price goes up 10% in the first year but then drops 10% in the second year. At the end of the second year do you have more, less or the same as you started with?
  6. You are driving a bus and tracking the number of passengers on the bus. At the first stop, the bus picks up 22 people. At the second stop, 15 people get off the bus and 8 new passengers get on. At the third stop, 5 passengers get off, and 13 new passengers get on. At the fourth stop, 5 passengers get off, and 2 get on. What is the color of the bus driver’s eyes?
  7. In a tiny cabin in the woods, two men lie dead. The cabin is not burned but the woods around it have burned. How did the men die?
  8. You are the owner of a pet store. You have a number of canaries and bird cages. If you place one canary per cage, you have one bird too many. If you place two canaries per cage, you have one cage too many. How many cages and canaries do you have?
  9. Mary’s father has five daughters: Nana, Nene, Nini, Nono, and what is the name of the fifth daughter?
  10. A rich father is dying and wants to leave his properties to his wisest son. He asks them to purchase something that can fill the bedroom, but is small enough to fit in their pocket. What did the wisest child bring?

[For more information on consulting interviews, please download “The HUB’s Guide to Consulting Interviews“.]

Math Questions

Maths Questions

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In consulting interviews, the interviewer may quiz you on your quantitative skills with one or two short maths questions.

Below we outline six (6) sample math questions to give you an idea of what to expect:

  1. What is 13 x 13?
  2. What percentage is 5 of 42?
  3. The total smart phone market is $900 million and our client’s sales are $120 million. What is our client’s market share as a percentage?
  4. Our client’s total costs are $350,000. Raw material costs account for 25% of total costs. How much does the company pay for raw materials?
  5. A company’s marketing costs are $50 million and it sells 40,654 units. What is the approximate marketing cost per unit?
  6. An investment bank helps a mining company raise $35 million and takes a 3% commission. What’s the investment bank’s commission?

[For more information on consulting interviews, please download “The HUB’s Guide to Consulting Interviews“.]

Sample Guesstimate Questions

Sample Guesstimate Questions

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The guesstimate question (market sizing or other) is one of the types of question you are likely to encounter in consulting interviews.

Below we list twenty three (23) sample guesstimate questions broken down by question type.

Population Questions

  1. How many births are there in America each day?
  2. How many petrol stations are there in Sydney?
  3. How many bottles of wine are consumed in France each month?
  4. How many cups of tea are drunk in England each day?
  5. How many pounds are spent on haircuts in the UK each year?
  6. How many weddings are performed in China each year?
  7. How many men’s suits were sold in the United States last year?
  8. Surfboards Inc. imports surfboards into America. Demand depends on the weather and the company needs to order stock six months in advance. How many surfboards should they order?
  9. Estimate the total revenues obtained from the Harry Potter movies.
  10. What is the size of the market for mobile phones in America?
  11. How many cars are sold in in Australia each year?
  12. How many people are buried each year in England?
  13. How many taxis are there in New York?

Household Questions

  1. What is the annual market for apples in America?
  2. What is the annual size of the market for golf clubs in Japan?
  3. What is the annual revenue of Harrods in London?
  4. What is the market for bicycles in America?

Preposterous Questions

  1. How far does the average Premiership footballer run in a game?
  2. How much does Mount Kilimanjaro weigh?
  3. How many ping-pong balls will fit inside a 747?
  4. How much does a 747 weigh?
  5. How many slices of pizza does it take to reach the moon?
  6. How many tennis balls fit in a swimming pool?

[For more information on consulting interviews, please download “The HUB’s Guide to Consulting Interviews“.]

Approaching the Guesstimate Question

Approaching the Guestimate Question

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A guesstimate question can be approached by breaking a question down into smaller pieces by asking the interviewer questions and making a series of narrowing assumptions.

You can break a question down either by starting big (e.g. making an assumption about the total population) or starting small (e.g. making assumptions about the average household or some other piece of the whole and then extrapolating).

After coming up with an estimate, it is a good idea to sanity check whether the estimate is in the right ball park by establishing reasonable upper and lower bounds within which the answer should fall.

There are three types of guesstimate questions that you might come across: population questions, household questions, and preposterous questions.

For population questions, the standard formula for calculating the market size is the following:

Market Sizing Standard Formula

In finding the market size, segmenting the population using simple demographics will normally be the way to go. You might decide to segment the population by age group, gender, geography, income, or marital status.

[For more information on consulting interviews, please download “The HUB’s Guide to Consulting Interviews“.]

Guesstimate Questions

Guesstimate Questions

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The guesstimate question frequently comes up in consulting interviews.

It will often be a market sizing question, which may be a standalone question or part of a larger case question.

What will you be asked to do?

The typical guesstimate question will require you to estimate a number by doing a rough “back of the envelope” calculation. You are supposed to reach a final answer by using a series of narrowing assumptions.

Your assumptions should have a sound basis and you should explain the logic behind your assumptions, however it is not important that your assumptions be 100% accurate.

What is being assessed?

The guesstimate question is quite different from the kind of interview questions that you are probably used to.

For the guesstimate question, it is better to arrive at the wrong answer with good assumptions and clear logic than to know the right answer because you read it in a text book.

[For more information on consulting interviews, please download “The HUB’s Guide to Consulting Interviews“.]

Behavioural Interview Questions

Behavioural Interview Questions

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In consulting interviews, the interviewer is likely to ask questions based on your résumé with the aim of understanding your skills and experience.

Your résumé may provide a structure for these kinds of interview questions, but you also need to be prepared to elaborate on your experience including by highlighting your skills using different examples from the ones contained in your résumé.

The way you answer behavioural questions can be just as important as what you say. Appearing confident and relaxed is crucial.

What skills is the firm you are applying for specifically looking for?

Prior to the interview, review your résumé and answers to the most likely questions. This will reduce your stress levels.

In general, interviewers are looking for the following qualities:

  • Leadership skills – Consultants need to be able to promote themselves, their ideas, and the firm;
  • Teamwork skills – Consultants spend long hours travelling and working together, and so need the ability to get along;
  • Analytical skills – Research and analysis are bread and butter consulting skills;
  • Communication skills – Good analysis is meaningless if you can’t convey your ideas;
  • Confidence – Clients can be busy and demanding, and consultants need to have the right mettle. Sometimes one of the interviewers will play “bad cop” to try and ruffle your feathers;
  • Personality – Do you have hobbies, interests, and a sense of humour?

You should prepare answers ahead of time so that you can address this part of the interview without needing to think on the spot.

Memorize bullet points instead of lengthy answers, and have at least three stories to demonstrate each personal quality.

[For more information on consulting interviews, please download “The HUB’s Guide to Consulting Interviews“.]

12 Tips for Nailing the Guesstimate Question

Twelve Tips for Nailing the Guestimate Question

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Below we outline twelve (12) tips for nailing the guesstimate question:

1. Practice

Practice doing some guesstimate questions before the interview so that you are prepared. It is a good idea to bring a pen and graph paper to the interview so that you can keep track of your calculations.

2. Know some basic facts

Below are some facts that you should know. In addition, you should also know the key demographics for the country where you are interviewing.

Guestimate Question Basic Facts

3. Use round numbers

You are responsible for doing the calculations so pick numbers that are easy to work with. For example, estimate the population of America as 300 million not 316.1 million.

4. Clarify units of measurement

You should clarify the units of measurement that the interviewer wants from you. For example, market size can be measured by revenue or sales volume.

5. Take a moment

It is important to maintain your composure so before starting to answer the guesstimate question take a moment to write down the key details of the question, and consider your approach.

6. Have a clear approach

It is important to have a clear approach to help you answer the question. More on this in a later post.

7. Ask questions

Your interviewer may be able to provide you with direction. If the question is “How many ping-pong balls will fit inside a 747?” the first question you might ask is “What is the volume of a ping-pong ball?”

8. State your assumptions

The interviewer may not know the answer or may not want to give you direction so you’ll have to make assumptions.

It is a good idea to clearly state your assumptions. For example, “let’s assume that the diameter of a ping-pong ball is 4cm. The formula for the volume of a sphere is 4/3.pi-r^3. So the volume of a ping-pong ball would be about 11-pi centimetres cubed”.

9. Think out loud

The interviewer is trying to assess your thought process in getting to the answer, not the answer itself. If you don’t think out loud, you make it difficult for the interviewer to give you points.

10. Explain your logic

As you make your way through the problem it is helpful to explain the logic behind each of your assumptions.

Instead of saying “a 747 is about 100 metres long” you could say “I know that an average car is about 5 metres long and based on my experience I would say that 20 cars lined up end to end would be about the same length as a 747. So I will assume that a 747 is 100 metres long”.

11. Answer the question

After doing all of the calculations remember to answer the question that has been asked.

12. Be prepared for follow-up questions

After you answer the guesstimate question, the interviewer might ask “If you had to find the real answer to the question, how would you do it?” This is a test of your creativity and resourcefulness.

[For more information on consulting interviews, please download “The HUB’s Guide to Consulting Interviews“.]

Have you ever failed at anything?

Overcoming Failure

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Another question that may come up in the consulting interview is “have you ever failed at anything?”

This question is designed to assess your ability to learn from experience, and overcome obstacles.

In preparing a response to this kind of question, develop a story about a time that you were not able to achieve a goal, how you adapted your approach, ultimately achieved success, and what you learnt from the experience.

Do not tell stories about academic failure, illegal activity, or failed relationships.

[For more information on consulting interviews, please download “The HUB’s Guide to Consulting Interviews“.]

Why Consulting?

Why Consulting

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In the consulting interview, your interviewer is likely to ask you the following straightforward question, “why consulting?”

Relevance of the question

The question is relevant for two reasons:

  1. Your interviewer is likely to ask it in the interview; and
  2. You will be much more likely to succeed (in the interview and afterwards) if you can clearly and passionately articulate in your own mind the reasons why you want to work in the consulting industry.

How to answer the question

The way you respond to the question is more important than what you say. The most important thing is to be sincere and passionate about getting into the industry.

Think about why you want to get into the industry and write down each reason as a bullet point. Review your points before stepping into the interview.

Reasons to enter the consulting industry

Here are thirteen (13) reasons that you might give in answer to the question “why consulting?”:

  1. Early responsibility: Opportunity to get early responsibility tackling real world business problems;
  2. Skills: Opportunity to develop marketable skills in a prestigious environment;
  3. Learning: Continuous learning through project experience and formal training;
  4. Work experience: Working with intelligent and energetic people;
  5. Mentors: Exposure to senior consultants and the chance to learn how they think, act, and analyze problems;
  6. Networking: Access to senior clients and an extensive alumni network;
  7. Variety of work: Opportunity to undertake a diverse range projects across a broad range of industries;
  8. Remuneration: Consulting is prestigious and the money is good;
  9. Teamwork: Working as part of an elite fast paced team;
  10. Impact: Creating solutions that lead to improved organisational performance;
  11. Travel: Opportunity to travel with work;
  12. B-school: Increasing the chance of being accepted into a top business school;
  13. Exit opportunities: The skills, networks and branding of a few years at a management consulting firm will open new doors and the experience will always look good on your résumé.

[For more information on consulting interview, download “The HUB’s Guide to the Consulting Interview“.]

Researching Consulting Firms

Research 2

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IN this post we look at researching consulting firms.

Why, how and what should you research?

Below we provide some ideas to help make your research as effective and efficient as possible.

1. Why should you research?

Take control of your career. Researching consulting firms doesn’t just help you prepare your application and improve your interview performance, it will also help you decide whether you are really interested in pursuing a career in the consulting industry.

The objective is to get a job offer. This point sounds obvious, however it can be easy to take your eyes off the prize.

Researching consulting firms will help you figure out which firms suit your personality and career goals and will significantly improve your interview performance.

It is important to show a genuine interest. Being knowledgeable about the consulting industry and the firm for which you are applying is an easy way to demonstrate that you have a genuine interest in the consulting industry.

It is important to remember that, regardless of your university grades, the firm will need to spend a lot of money training you. A consulting firm does not want to hire people who are not keen to be there.

Keep the stress levels down. Being well informed can help to lower your stress levels. For example, if you have done your homework, questions like “Why do you want to work here?” and “What is it about our firm that interests you?” should not faze you in the slightest.

2. How should you research?

Talk to people. The best source of information about a consulting firm is from people who have had direct contact with the firm. Talk with current and former employees, friends who have gone through the interview process or the firm’s HR personnel.

Read the firm website. Every candidate will read the firm website, and so this is necessary but by no means sufficient. The amount of information that a firm provides on its website will vary but this will at least be a good starting point.

Read widely. The more you know about the economy, different industry sectors and the management consulting industry, the better.

3. What should you research?

Know the company basics. Having an understanding of the firm to which you are applying will demonstrate your knowledge, professionalism and interest in the consulting industry. Basic information that you should know includes:

  • The firm’s background,
  • Services and industry sectors,
  • Key office locations,
  • Recent media mentions, and
  • Key factors that distinguish the firm from its competitors.

When researching consulting firms, ask yourself questions such as:

  1. What services does the firm offer?
  2. Which industry sectors does the firm serve?
  3. How many employees does the firm have? How many offices?
  4. Does the firm offer a formal training program?
  5. How much partner contact and client contact can junior consultants expect?
  6. What are the typical working hours? What is the firm’s travel model? Is it possible to transfer between offices?
  7. At what level of experience are consultants required to specialize by service and industry sector?
  8. How are consultants reviewed? Does the firm have an “up or out” policy?
  9. How many positions is the firm looking to fill? How does that compare with previous intakes?
  10. What exit opportunities do the firm’s consultants typically pursue?

Understand how the firm interviews. In addition to learning about the firm, you should also find out about its interview process. What qualities are they looking for in applicants? How many interview rounds are there? Do they ask case questions? Does the firm put an emphasis on asking questions with a numerical component?

[For more information on consulting interviews, please download “The HUB’s Guide to Consulting Interviews“.]

Consulting Interview Expectations

Consulting Interview Expectations

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IN this post we consider some consulting interview basics: what to expect, what to wear, and what to bring.

1. What to Expect

Consultants are the public face of a consulting firm, and firms need to be able to trust consultants to interact with senior clients including CEOs and executive board members. As a result, consulting interviews are a rigorous process designed to assess not only an applicant’s analytical skills but also their confidence and professionalism.

2. What To Wear

Professionalism includes not only what you say, but also how you say it and how you appear. You should arrive at interviews looking as though you are already a consultant with the firm.

For men, appropriate interview attire includes a dark pressed suit, clean and ironed shirt (white or light blue are safe colours), tie, dark belt, dark socks, and dark polished shoes.

For women, appropriate interview attire includes a dark suit, blouse, stockings, and nice shoes.

3. What To Bring

It is a good idea to bring the following items with you to the interview:

  1. A black leather portfolio containing a pad of graph paper and a couple of pens. You will need to take notes during the case question;
  2. A few copies of your resumé – one for your reference and a few additional copies for your interviewers.

[For more information on the consulting interview, download “The HUB’s Guide to the Consulting Interview“.]

10 Tips For Nailing the Case Interview

10 tips for nailing the case interview

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ARE you preparing for consulting interviews?

In this post we provide 10 tips for nailing the case interview, written in stone.

1. Practice, practice, practice

When it comes to the case interview, preparation is crucial for three reasons:

  1. The interview process is extremely competitive. You are unlikely to succeed without a lot of practice;
  2. Case problems are indicative of the type of work that you will have to do as a consultant, and so your ability to answer case problems indicates your readiness to hit the ground running; and
  3. Your preparedness for the interview is an indicator of your passion for consulting. If you can’t be bothered to prepare, then you probably don’t want the job badly enough.

2. Take notes

You should take notes when the interviewer is giving you the facts of the case. Remember to bring graph paper and a pen to the interview so you can write things down.

3. Don’t make assumptions

Your interviewer will most likely leave information out when giving you the facts. You should not assume facts that have not been given to you.

4. Ask questions

Your interviewer expects you to ask questions in order to understand the situation and to clarify vague information. For example, if you don’t know the first thing about the automobile market, ask how much it costs to manufacture an engine. If you are asked to estimate the demand for hamburgers in Sydney, feel free to ask how many people live in Sydney and the surrounding areas. Your interviewer is likely to direct your line of questioning to a specific area, but you must be ready to control the conversation if the interviewer does not direct your reasoning.

5. Engage in active listening

Don’t ask a pre-prepared list of questions. Listen to the information that the interviewer provides and assess how it affects the problem. What is unclear and what do you still need to know? Make sure you respond to the information you receive and incorporate it into your analysis.

6. Maintain direct eye contact

Eye contact is important because it demonstrates confidence and authority. As a consultant you will meet with upper management and boards of directors regarding matters that you have been briefed on only hours before. The case interview is practice for the real thing.

7. Take your time

At the beginning of the interview, it’s okay to take anywhere up to 90 seconds to collect your thoughts. It is more important to give a well thought out and structured response than to respond immediately.

8. Clearly structure your answer

Structure your answer by setting out a framework for analysis. For example, “firstly I will consider X, secondly I will consider Y, and finally I will consider Z.”

A large part of a consultant’s job is to explain complex ideas clearly and succinctly. By structuring your answer, this will help you to structure your thoughts and may alert you to factors that you would have otherwise failed to consider. Providing a clear structure will impress your interviewers and help you to avoid giving them the impression that you are making it up as you go along.

9. Think out loud

The case question is an opportunity to show the interviewer how you think. As you analyse the elements of the case, be sure to talk out loud and explain your reasoning. This is the only way the interviewer can assess your performance.

10. Summarise your conclusions

You should be able to summarise your conclusions at any time, supported by the key findings that have been noting down or highlighting as you progress through the case.

[For more information on consulting interviews, please download “The HUB’s Guide to Consulting Interviews“.]

Stress Interviews

Stress

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In this post we look at the stress interview. If you’re interviewing for consulting positions, then you may be subjected to one.

The aim of the stress interview is to put you under pressure in order to see how you will react and whether you can calmly defend yourself.

Your interviewers might do this in one of two ways.

They might ask you questions, one after another in rapid fire succession, while at the same time making disparaging or rude comments about your answers.

Alternatively, they may give you the silent treatment, sitting sullenly in silence, waiting for you to start talking and then making you explain even your most basic comments.

Stay calm, it’s only a test.

[For more information on consulting interviews, please download “The HUB’s Guide to Consulting Interviews“.]

Consulting Interview Structure

IN this post we look at the structure of the consulting interview.

Firms will normally conduct two or three interview rounds, and each round will consist of two or more interviews back-to-back.

The case question is the cornerstone of the consulting interview, and some firms will employ a fixed structure for the case question, asking each candidate the same set of questions. In these firms the interviewer will lead the interview.

Other firms use a more open ended structure for the case question where the candidate will be expected to drive the case. This is done to see whether you can deal with ambiguity and drive towards a solution.

In addition to the case question, consulting interviews will usually also contain personal experience questions, guesstimate questions, math questions, brain teasers, and factor questions.

[For more information on the consulting interview, download “The HUB’s Guide to the Consulting Interview“.]

Purpose of the Consulting Interview

ARE you an aspiring management consultant?

If so, then you’re in luck. Over the coming months we will be posting about the consulting interview.

In this post we look at the purpose of the consulting interview.

The purpose of the consulting interview is twofold.

Firstly, it is a test of client readiness.

Management consultants are hired by senior executives to advise on their most pressing and challenging problems. Case questions, which form a core part of the consulting interview, are a kind of role playing exercise; a test of a candidate’s ability to perform under pressure, undertake a structured analysis of an unfamiliar problem, and communicate insights clearly and persuasively.

In other words, the interviewer wants to know whether you are ready to be placed in front of the client, and might ask questions such as, “In the past 12 months, a large smart phone manufacturer has experienced reduced profitability even as the size of the global market has grown rapidly. What is happening, and what should the company do about it?”

Are you ready to respond?

The second purpose of the consulting interview is known as “the Airport Test”.

In addition to all the questions that the interviewer will ask during the consulting interview, they will also be asking themselves (whether consciously or not) “would I want to be stuck with this person at an airport?”

You may have the right qualifications and have answered all the interview questions correctly, but if you don’t pass the “Airport Test” then the interviewer will be unlikely to progress you to the next round.

Why do interviewers use the Airport Test?

Two reasons.

Firstly, consultants spend a lot of time working in project teams, and if you are annoying or obnoxious then this will affect the morale, enjoyment and productivity of the team. Secondly, consultants often engage directly with senior clients, and so the interviewer needs to feel comfortable that you will be able to represent the firm.

Eye contact, a firm handshake, and a pleasant smile will take you a long way.

[For more information on the consulting interview, download “The HUB’s Guide to the Consulting Interview“.]