In this video, I'm going to teach you fundamental strategies and frameworks for tackling case interviews in roughly 30 minutes. We'll cover each step of the case interview from beginning to end, and go through a full case interview together. By the end of this video, you will not only fully understand what case interviews are, but you will learn effective strategies to use on interview day to make you feel more confident in yourself. We have a lot of material to cover, so please give this video a quick like to support the channel and we'll get started
right away. So, what is a case interview? As you may already know, case interviews are a special type of interview question that is commonly used by management consulting companies such as McKinsey, BCG, and Bain. A case interview or case is a 30 to 45 minute exercise in which you and the interviewer will work together to develop a recommendation
to answer or solve a business problem. These business problems can be anything that real companies face. A few examples are, how can Coca-Cola increase its profitability? What should Netflix do to increase customer retention? How should Apple price its new iPhone?
And where should Disney open its next Disneyland theme park? At the beginning of the interview, the interviewer will give you background information and the business problem. And in the end, you'll present a recommendation and provide two to three reasons that support your recommendation. These two to three reasons will likely be both quantitative and qualitative. You may need to make estimations or assumptions, perform calculations, interpret charts and graphs, brainstorm ideas, and have qualitative discussions.
There is usually no single right answer for a case. As long as you have logical reasons and evidence that support your recommendation, you will do well. Although there are many business problems you could be asked to solve, almost all case interviews follow the same format or structure. So, the good news is that you can use the same strategies for every single case interview. There are seven main parts of a case interview.
Understanding the case background information, asking clarifying questions, structuring a framework, starting the case, solving quantitative problems, answering qualitative questions, and delivering a recommendation. To best illustrate exactly how a case interview looks like, we'll go through each of these parts step by step. Let's start with the first part, understanding the case background. The case interview will begin with the interviewer giving you the case background information. Let's say that the interviewer reads you the following.
Our client is a large manufacturer and retailer of non-alcoholic beverages such as sodas, juices, sports drinks, and teas. They have annual revenues of roughly$30 billion and an operating margin of roughly 30%. Our client is looking to grow and is considering entering the beer market in the United States. Should they enter? As the interviewer reads this, take notes.
It is important to understand what the objective of the case is and keep track of information. One strategy for taking notes effectively is to turn your paper landscape and draw a vertical line to divide your paper into two sections. The first section should be roughly two thirds of the page, while the second section will be roughly one third of the page. Take notes in the second section of your page. After the interviewer finishes giving the case background information, confirm that you understand the situation and objective.
Provide a concise synthesis like the following. To make sure I understand correctly, our client is a large manufacturer and retailer of non-alcoholic beverages. They are looking to grow, and our objective is to determine whether or not they should enter the U.S. Beer market. Make sure your synthesis is concise.
You do not want to regurgitate verbatim everything that the interviewer has said. Only mention the most important pieces of information. You should also make sure that you verify the objective of the case. Answering or solving the wrong case objective is the quickest way to fail a case interview. Next, we'll move on to the next step, asking clarifying questions.
Now you'll have the opportunity to ask questions before you begin thinking about how to solve the case. At this point, only ask questions that are absolutely critical for you to fully understand the case background and objective. You'll be able to ask more questions later. There are four types of questions you could ask. One, asking for a definition of a term you're unfamiliar with.
Two, asking for information that strengthens your understanding of the company or situation. Three, asking questions that clarify the objective of the case. Four, asking to repeat information you may have missed. So for this case, you might ask the following questions. Is our client looking to specifically grow revenues or profits?
Answer, our client wants to grow profits. Is there a particular financial goal or metric our client is trying to reach within a certain timeframe? Answer, they're looking to grow annual profits by$5 billion within five years. Now we'll move on to the third step of the case interview, structuring a framework. After you understand the case background and objective, lay out a framework of what areas you would want to look into to answer or solve
the case. A framework is simply a tool that helps you structure and break down complex problems into simpler, smaller components. Think of a framework as brainstorming different ideas and organizing them into different categories. When creating a framework, it is completely acceptable to ask the interviewer for a few minutes of silence to write it out. You might say something like this.
Would you mind if I take a few minutes to structure my thoughts and develop a framework to tackle this case? Most of the time, the interviewer will gladly give you a couple of minutes to gather your thoughts. For this case example, what do you need to know in order to help the client decide whether or not they should enter the beer market? You might brainstorm the following questions.
Does our client know how to produce beer? Would people buy beer made by our client? Where would our client sell its beer? How much would it cost to enter the beer market? Will our client be profitable from doing this?
How can our client out-compete competitors? And what is the size of the beer market? This is not a very structured way of tackling the case. Instead, you should organize your ideas into a framework that has three to four broad areas, also known as buckets, that you want to investigate.
An easy way to develop these buckets is to ask yourself, what are the three to four things that absolutely must be true for you to 100% recommend that the client should enter the beer market? In an ideal world, these four things would need to be true. 1. The beer market is an attractive market with high profit margins.
2. Competitors are weak and our client will be able to capture significant market share. 3. Our client has the capabilities to produce an outstanding beer product. 4.
Our client will be extremely profitable. You can rephrase these points to be the broad categories in your framework. You can write your framework in the first section of your paper. Notice that the four buckets in the framework correspond to the four things that we believe need to be true to be confident in recommending that our client should enter the beer market.
Next, let's add a few bullet points under each category to give more details on exactly what information we need to know to decide whether our client should enter the beer market. Notice that each bullet in a bucket is a question that helps answer the overall question of the bucket. For example, in the first bucket, knowing the market size, the market growth rate, and average profit margins helps us determine whether the beer market is an attractive market.
This entire process of brainstorming ideas and developing a structured framework should only take a few minutes. So how do you come up with a framework so quickly? Most candidates make the mistake of either using a single memorized framework for every case, or memorizing a different framework for every type of case. The issue with memorized frameworks is that they aren't tailored to the specific case you are solving for.
When given an atypical business problem, your framework elements will not be entirely relevant. Interviewers can easily tell that you are regurgitating memorized information and not thinking critically. So instead of memorizing frameworks, I recommend memorizing a list of eight to 10 broad business elements, such as the following. Market attractiveness, competitive landscape, company capabilities or attractiveness, customer segments or needs, profitability or financials, strategic alternatives, risks and mitigations, and creating your own bucket.
When given a case, mentally run through this list and pick the three to four elements that are most relevant to the case. This will be your framework. If the list does not give you enough elements, brainstorm and add your own unique elements to your framework. This strategy guarantees that your framework elements are relevant to the case. It also demonstrates that you can create unique tailored frameworks for every business problem or situation.
Using this strategy for this case, you would run through your list of memorized business elements and select the following. Market attractiveness, competitive landscape, company capabilities, and profitability. As you can see, this strategy is a shortcut for creating unique tailored frameworks for every business problem. You do not need to develop a framework entirely from scratch each time. Now that you have your framework, turn your paper to face the interviewer and walk them through it.
It might sound something like this. To decide whether or not our client should enter the market, I want to look into four main areas. One, I want to look into the beer market attractiveness. Is this an attractive market to enter? I'd want to look into areas such as the market size, growth rate, and profit margins.
Two, I want to look into the beer competitive landscape. Is this market competitive, and will our client be able to capture meaningful market share? To do this, I want to look into questions such as the number of competitors, how much market share each competitor has, and whether competitors have any competitive advantages. Three, I want to look into our clients'capabilities.
Do they have the capabilities to succeed in the beer market? I want to look into things such as whether they have the expertise to produce beer, whether they have the distribution channels to sell that beer, and whether there's any existing synergies they can leverage. 4. I want to look into expected profitability. Will our client be profitable from entering the beer market?
I'd like to look into areas such as expected revenues, expected costs, and how long it would take to break even. At this point, the interviewer might ask a few questions on your framework, but will otherwise indicate whether they agree or disagree with your approach. Moving on to the next step of the case interview, starting the case. There are two different styles of case interviews, interviewer-led cases and candidate-led cases.
If this is an interviewer-led case, the interviewer will propose which area of your framework they would like to dive deeper into. They might say something like the following. Your framework makes sense to me. Why don't we start by estimating the size of the US beer market? If this is a candidate-led case, you will be expected to propose an area to look into.
There is no right or wrong answer as to which area to start first. So, feel free to propose any area of your framework as long as you have a reason for it. You could say something like the following. To start, I'd like to look into the beer market attractiveness. I'd like to first understand the market size to determine if the beer market is an attractive market.
If you end up picking an area that the interviewer does not want you to explore, they will redirect you to an area that they do want you to explore. So, these two styles of case interviews are nearly identical. The only difference is whether or not you have to proactively propose what area to explore first and what area you want to explore next.
So, once the case has been kicked off by either you or the interviewer, you'll have to solve quantitative problems and answer qualitative questions, and in this section, we'll focus on solving quantitative problems first. There are three different types of quantitative problems you may get asked to solve. Market sizing or estimation questions, profit or profitability questions, and charts and graphs questions. Let's start with the first type, market sizing or estimation questions.
These types of questions ask you to estimate the size of a particular market or calculate a particular figure. Let's say that the interviewer asks you the following, what is the market size of beer in the US? Most candidates jump right into the math, stating the US population and then performing various calculations. Doing math without laying out a structure often leads to making unnecessary calculations or reaching a dead end. Instead, lay out an upfront approach to help avoid these mistakes and demonstrate that you are a logical, structured thinker.
For this market sizing problem, you could structure your approach in the following way. Start with the US population, estimate the percentage that are legally allowed to drink alcohol, then estimate the percentage that drink beer, then estimate the frequency in which people drink beer, and then finally estimate the average price per can or bottle of beer. Multiplying all of these steps together will give you the answer. By laying out an approach upfront, the interviewer can easily understand how you are thinking about the problem.
With the right structure, the rest of the problem is just simple arithmetic. Sometimes the interviewer will give you numbers to use for these calculations, but other times you'll be expected to make assumptions or estimates. When performing your calculations, make sure to do them on a separate sheet of paper. Calculations often get messy, and you want to keep your original paper clean and organized. A sample answer to this question could sound like the following.
Following my approach, I'll assume the US population is 320 million people. Assuming the average life expectancy is 80 years old and an even distribution of ages, roughly 75% of the population can legally drink alcohol. This gives us 240 million people. Of these, let's assume 75% of people drink beer. That gives us 180 million beer drinkers.
On average, a person drinks perhaps 5 beers a week, or roughly 250 beers per year, if we're assuming roughly 50 weeks per year. So, that gives us 180 million people times 250 beers per year, or 45 billion cans or bottles of beer.
Assuming the average can or bottle costs$2, this gives us a market size of$90 billion. Now that you have your answer, you should not only just answer the question, but tie your answer back to the case objective. In other words, how does knowing the US market size of beer help you decide whether or not our client should enter the beer market? You could say something like the following.
Given that our client has annual revenues of$30 billion, a$90 billion beer market represents a massive opportunity. The market size makes the beer market look attractive, but I'd like to understand if beer margins are typically high and determine how much market share our client could realistically capture. The second type of quantitative question you could be asked is to calculate profit or profitability. To answer profit or profitability questions, you only really need to know the basic formulas for profit.
These are that profit equals revenue minus costs. Revenue equals quantity times price. Costs equal total variable costs plus total fixed costs. And finally, total variable costs equal quantity times variable cost per unit. Putting these equations together, we can rewrite them in the following simplified way.
Profit equals price minus variable costs times quantity minus total fixed costs. You should also know that profit margin equals revenue minus costs, all divided by revenue. And you should also know what a break-even point is. A break-even point occurs when a company sells enough product such that it has exactly recouped all of its costs. In other words, break-even occurs when profit equals zero.
To solve for the break-even point, you would simply set profit equal to zero and solve for the unknown variable in the equation. As an example of a profit or profitability problem, let's say that the interviewer asks you the following. Assume that a 12-ounce can of beer sells for$2 on average. To produce a keg of beer, it costs$100 for raw materials,$95 for labor, and$75 for storage. If a keg of beer holds 1,800 ounces of beer, what is the profit margin for beer?
As with any other type of quantitative problem, make sure to structure your approach before you begin doing any calculations. A sample answer could look like the following. To calculate the average margin for beer, I will first calculate the total costs to produce a keg of beer. Next, I will divide the total volume of a keg by the total volume of a can to determine how many cans a keg of beer produces.
Afterwards, I will divide the total cost of producing a keg of beer by the number of cans to determine cost per can. Finally, I can use the price and cost per can of beer to calculate the average margin of beer. Following this approach, the total cost of a keg of beer is$100 plus$95 plus$75, or$270.
The number of cans of beer in a keg is 1,800 ounces divided by 12 ounces, or 150 cans. Therefore, the cost per can of beer is$270 divided by 150 cans, or$1.80. Since the average price of beer is$2 per can, the profit is$0.20 per can. This makes the margin$0.20 divided by$2, or a 10% profit margin.
Now that you have your answer, remember to tie your answer back to the overall case objective. Compared to our client's overall operating margin of 30%, the beer market profit margin of 10% is significantly lower. Although the market size for beer is large, the low margin makes the beer market less attractive. The third type of quantitative question you could get asked is interpreting charts and graphs. The types of charts and graphs you should be familiar with include bar charts, pie charts, line graphs, bubble charts, and waterfall charts.
Returning to our case example, the interviewer may show you the following. A helpful strategy is to start your analysis by explaining what the axes of the chart show. This will help you understand the chart better. Don't just read what numbers the chart shows, but instead interpret what those numbers mean for the case objective. A sample answer might sound like the following.
For this chart, we have market share on the y-axis and different categories of beer on the x-axis. For each category, we see that market share is concentrated among a few large players. This implies a highly competitive market with high barriers to entry. Because of this, the beer market does not look attractive because it is so competitive. In addition to asking quantitative questions, the interviewer will also ask qualitative questions.
There are two types of qualitative questions, brainstorming questions and business opinion questions. Looking at brainstorming questions first, the interviewer might ask, what are the barriers to entry in the beer market? Most candidates answer by listing ideas that immediately come to mind, such as brewing equipment, beer production expertise, distribution channels, or brand name. This is a highly unstructured way of answering the question. Make sure to use a simple structure to organize your thoughts.
A simple structure, such as thinking about barriers to entry as either economic barriers or non-economic barriers, helps facilitate brainstorming and demonstrates logic and structure. With this structure, you might come up with the following answer. For economic barriers, you have equipment, raw materials, and other capital. For non-economic barriers, you have beer brewing expertise, brand name, and distribution channels.
Examples of other simple structures that you can use include the following. We have internal, external, short-term, long-term, economic, non-economic, quantitative and qualitative, direct and indirect, supply side and demand side, upside and downside, and benefits and costs. Additionally, take your answer and connect it back to the case objective. In this example, are these barriers to entry high or low in your opinion?
Do you think our client can overcome these obstacles to enter the beer market? You might answer this question in the following way. I'm thinking of barriers to entry as economic barriers and non-economic barriers. Economic barriers include things such as equipment, raw material, and other capital. Non-economic barriers include beer brewing expertise, brand name, and distribution channels.
Looking at these barriers, I think it will take our client a lot of work to overcome these barriers. While our client does have a brand name and distribution channels, they lack beer brewing expertise and would have to buy a lot of expensive equipment and machinery. These barriers make entering the beer market difficult. The second type of qualitative question are business opinion questions.
The interviewer may ask you something like the following. Do you think there are significant production synergies in producing non-alcoholic beverages and producing beer? As always, structure your answer and connect your answer to the case objective. Here is a sample answer. Production involves equipment, raw materials, and labor.
There is likely some overlap in equipment, such as using the same bottling machines, but our client will likely need new equipment for brewing beer. Raw materials on the other hand are completely different. Our client will need to source barley, hops, and yeast, which it currently does not use in its existing beverages. Finally, the same labor can be used, but employees will need new training since producing beer is fairly different from producing a non-alcoholic drink.
Overall, I think there are only a few production synergies that our client can leverage, which makes entering the market a bit more difficult. You've done a ton of work, and now it is time to put everything you've done together into a recommendation. Throughout the interview, you should have been making notes of key takeaways after each question that you answer. Take a look at the key takeaways you've accumulated so far and decide whether you want to recommend entering the beer market or not entering the beer market.
Throughout the case, you may have identified the following key takeaways. The US beer market size is$90 billion compared to our client's annual revenue of$30 billion. The beer market profit margins are 10%, compared to our client's average margin of 30%. The beer market is highly concentrated across all categories. Barriers to entry are moderate, and there are some synergies with existing production.
Remember, there is no right or wrong recommendation, as long as you support your recommendation with reasons and evidence. Secondly, regardless of what stance you take, make sure you have a firm recommendation. You do not want to be flimsy and switch back and forth between recommending entering the market and not entering the market. Third, make sure your recommendation is clear and concise. And finally, include next steps in your recommendation.
You can use the following structure when delivering your recommendation. First, clearly state what your recommendation is. Then, follow that with two to three reasons that support your recommendation. And finally, state what potential next steps would be to further validate your recommendation. Next steps can include a number of different things.
You could include buckets in your framework that you were not able to cover. You could also include open questions that you still have regarding the case. Finally, you could name potential risks relating to your recommendation that you would like to explore. Typically, the interviewer will prompt you for a final recommendation. They might say something like, let's say that you bump into the CEO in the elevator.
He asks what your preliminary recommendation is. What would you say? The conclusion of this case might sound like the following. I recommend that our client should not enter the beer market for the following three reasons. One, although the market size is fairly large at$90 billion, the margins for beer are just 10%,
significantly less than our client's overall operating margin of 30%. Two, the beer market is very competitive. In all beer segments, market share is concentrated among a few players, which implies high barriers to entry. Our client lacks beer brewing expertise to produce a great product to compete with incumbents. Three, there are not that many production synergies that a client can leverage with its existing products.
Our client would need to buy new equipment, source new raw materials, and provide new training to employees, which would be time-consuming and costly. For next steps, I want to look into our client's annual expected profits if they were to enter the U.S. Beer market. I hypothesize they will be unable to achieve an increase in annual profits of$2 billion within five years, but I'd like to confirm this through further analysis.
And with that, we have made our way through an entire case interview. That's all there is to it. To recap, all case interviews roughly follow the same format or structure. The industry you are working with may be different, the quantitative problems may be different, and the qualitative questions may be different, but the overall strategy and approach remain the same.
If you follow the fundamental strategies covered in this video and continue practicing case interviews, you should be in great shape for your interview. We've covered a lot of material in this video, but of course, there is many more case interview strategies to learn and cases to be practiced. This video is a short preview of the full Hacking the Case Interview online course, which covers each step of the case interview in even more detail.
Through over 50 video lessons and 20 full-length practice cases, this 15-25 hour online course is designed to get you a prestigious and lucrative job offer at a top-tier consulting firm. Second, if you found this video helpful, please take a second to give this video a like to help support the channel and encourage more content. Finally, the only way to get better at case interviews is to practice,
so make sure to do as many mock case interviews as you can. Check out some of the other videos on my channel where I walk through many full-length mock case interviews.