Whether you are applying for a job at Boston Consulting Group, McKinsey, or Bain and Company, Case Interview Secrets can help you nail your interview. There is a crash course in this book on how you should answer the questions you’ll be asked.
You may be wondering if you should read the book. This book review will tell you what important lessons you can learn from this book so you can decide if it is worth your time.
At the end of this book review, I’ll also tell you the best way to get rich by reading and writing.
Without further ado, let’s get started.
Lesson 1: When complicated problems are broken down and rounded, they can be solved quickly
Is it possible to have a computational question?
You are asked to make estimates based on a few facts that have been provided to you. To solve such problems successfully, precise arithmetic is required, which is difficult.
Complex mathematical equations, on the other hand, can be performed more accurately and quickly if they are broken down into smaller steps. Assume you have a market of 3 million customers and a 15 percent market share. How much money do you make?
The market value could be calculated by multiplying 3 million buyers by $200, which equals $600 million. 15 percent of 600 million can be divided into 10 percent and 5 percent to yield 60 million and 30 million for 10% of 600 million. Simply multiply 60 million by 30 million to obtain 90 million.
It is not always necessary to arrive at a precise figure. In fact, you’ll often only need a rough estimate, which you can get by rounding numbers to the nearest whole number. If you use rough estimates, you can solve equations much faster.
Assume there are 42 million customers, the market share is 12.7%, and the revenue per buyer remains $200. How much money does this generate?
Because it is impossible to arrive at a precise answer quickly in the head, you must make precise estimates:
For 42 million buyers, make 40 million the new round number. Increase the 12.7% figure to 15%. This rounding should be increased to compensate for the 40 million you rounded down. Using the same formula, you can arrive at a revenue of $1.2 billion, which is a close approximation to the exact answer of $1.07 billion.
Lesson 2: Find a proxy that you can use to make a big-picture estimate
If rounding can help you solve complex math problems, how can it help you determine the size of a product?
Let me demonstrate how it’s done:
First and foremost, keep in mind that such questions are designed to assess how you approach them. It is less important whether you get the right answer. As a result, your next step would be to look for proxy factors or other factors that could assist you in making a decision.
How many hamburgers would you estimate an average drive-thru sells each day if you were asked? Your substitute will be something that assists you in calculating hamburger sales. Proxy data, such as the number of vehicles that visit the establishment on a daily basis and the number of burgers ordered per vehicle, could be useful.
Once you’ve discovered your proxies, it’s critical to determine their limits; after all, they’re only rough estimates. During peak hours, for example, the drive-in may be unable to serve all of its potential customers. This flaw must be considered, and sales must be broken down by off-peak and peak times.
There is a limit to how many hamburgers can be made during peak times; to determine this, additional proxy data, such as the number of counters and the average order time, are required. The calculation is based on the average purchase price and the number of cars on the road during off-peak hours.
Assume that the daily peak hours are four and the off-peak hours are eight. Each peak hour, 100 vehicles pass through the establishment, and each off-peak hour, 30 vehicles pass through. Each car takes about three minutes to buy two hamburgers at the drive-in. All off-peak customers can be served due to the shop’s capacity of 40 cars per hour.
Off-peak sales in this scenario can be calculated as 8 hours x 30 cars x 2 hamburgers per car = 480 hamburgers per day. Based on 40 cars and two hamburgers per car, peak hour sales of 320 hamburgers result in a daily total of 800.
Lesson 3: Treat your interviewer as a client by acting like a professional consultant
You might be perplexed as to why an interviewer would ask you to make so many speculative estimates during a case interview. Is it possible to calculate the number of hamburgers sold in a drive-thru?
These types of questions are asked to prospective employees to simulate what clients may ask you as a consultant. Case interviews are critical to your future career as a consultant, so take them seriously. Your interviewers’ questions will vary depending on what they’re looking for and why they’re asking them.
Interviewers at large consulting firms may appear aggressive to someone who has previously interviewed there. If you have had an interview there, interviewers may constantly ask you for estimates.
Why is this the case?
Customers do this all the time. To deal with an interview, you should consider yourself a professional consultant and think of the interviewer as a client. The answers to the questions should be as representative of your company’s reputation as possible.
It is not enough for consultants to be able to correctly answer questions and demonstrate analytical abilities. They must also be good communicators. Fidgety and nervous candidates are unlikely to be hired, regardless of how well they answer questions. Customers will not trust the advice of a nervous consultant.
Consider for a moment that a consultant is sweating and shaking while recommending the firing of 3,000 employees. Could this consultant be trusted with such vital advice? Because it’s unlikely, it’s critical to exude confidence.
Once you’ve discovered this crucial piece of the puzzle, answering case interview questions like “what can I do to turn my failing business around or increase my profits?” will be much easier.
Lesson 4: Qualitative questions can be answered using different frameworks
Let’s move on to the next step now that you know how to approach quantitative questions. You may also be asked general business questions like “why am I losing money?” or “should this business merge with another?”
This type of question can be handled when frameworks are used. Profitability frameworks, for example, can be used for quantitative analyses. To calculate profit, revenue and costs are divided into two categories.
After that, you can perform one mathematical operation at a time until you have pinpointed the problem’s core. For example, consider the question, “Why is the company losing money?”
Profit is calculated by multiplying revenue by the number of units sold and cost by the number of units sold. You can divide the cost per unit into fixed and variable costs depending on the type. When you use this framework, you can see the business quantitatively. If the variable costs are too high, this could result in an increase in total cost and, as a result, a decrease in profit.
If you don’t understand why variable costs are so high, determining that they are too high won’t help much. To do so, you must first understand how the business works.
This framework can be used to analyze a client’s business, industry, and market. These qualitative aspects are examined by identifying four business subsegments: customers, products, companies, and competitors.
With customers, we are concerned with how the buyer base divides into segments with varying needs. You must figure out what a product is, how it’s packaged, and how it’s made.
It is necessary to understand a company’s distribution channels, organizational structure, and other elements in order to define it. Competition refers to how your client’s company compares to its competitors and whether or not they are doing things that your client’s company is not.
Using this framework, you may discover that a client’s firm has high costs because, for example, the new package design is overly complicated and wastes a significant amount of time and resources.
About the Author
Through his website, www.caseinterview.com, former McKinsey interviewer Victor Cheng has assisted countless candidates in preparing for case interviews.
Buy The Book: Case Interview Secrets
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