ALL ABOUT

CONSULTING IN BUSINESS
Presentation structure

Estimation Cases
ESTIMATION CASES – STEPS

• You are asked to come up with an “educated guess” of

some number

• The ability to work with incomplete or unavailable data, and

generate reasonable estimates is a crucial skill in
consulting

• “How many gasoline pumps are there in New York City?”

ESTIMATION CASES – STEPS

• Make plausible assumptions.

• Don’t just pick a random number. Even if it is wrong, as

long as your number is grounded in common sense or
backed by a sound rationale, you are fine.

• For example, common sense tells you that the population

of New York City cannot be over fifteen million or under
three million (it’s ten million).
ESTIMATION CASES – STEPS

• Lay out your logic before you start making assumptions.

• Set up your answer in a tree diagram with the branches as

various components of data that will help you arrive at a
final number.

• For example, in estimating the number of gasoline stations

two of the ‘branches’ you should consider are the number
of cars in the city and geographical size.
ESTIMATION CASES – STEPS

• Use nice round numbers to simplify the slog of dividing or

multiplying.

• Conduct a sanity check on your final number. Even if your

assumptions appear sound, you may have made a
calculation or logical mistake.

• For example, does it make sense to have over 600

gasoline stations in Manhattan when this would probably
mean a station at every street corner
Profitability Cases
The Profit Equation

• Simple, but invaluable when asked to explain changes in profitability.

• Profit = (Quantity x Price) - Costs

• Costs = Fixed Costs + Variable Costs

• Breakeven Quantity = Fixed Cost / (Price – Variable Cost)

• There are three drivers of profitability: sales volume (quantity), price and costs.

• When doing a case that involves a change in profitability, you must determine
which of these elements have changed, and then determine the causes of
those changes.
The Profit Equation

• Issues related to each of the three that must be examined are:

- Factors that impact Price
• Consumer demand elasticity
• Competitors’ price changes
• Market power – can we charge a premium?
• Have we lost a previous ability to charge a premium?
• Product differentiation
• Opportunities for differential pricing of the same product (eg. airline seats)
• Brand implications, eg. strength of brand
• Methods of pricing – cost plus; matching; market based (examine the pros and
cons of each)
The Profit Equation contd…

- Factors that impact Volume (quantity)

• External Factors
• Competition
• Share of market
• Positioning / Image
• Customers
• Profitability
• Differentiation
• Future plans
• Substitutes / Complements
• Market forces
• Declining market size
• Technology
• Regulation
• Customers
• Needs – latent vs demonstrated
• Price sensitivity
• Segmentation
• Product extension eg. Diet Coke
The Profit Equation contd…

- Factors that impact Volume (quantity)

• Internal Factors
• Distribution Channels
• Manufacturing Capacity
• Logistics / Supply Chain / Inventory Management

• Growth/reduction in overall market

• Increase/decrease in sales to current customers with current products
• Increase/decrease in sales to current customers with new products
• Increase/decrease in sales to new customers with current products
• Increase/decrease in sales to new customers with new products
The Profit Equation contd…

- Cost
• Portions which are fixed and variable
• Time frames in which costs are fixed
• Short run vs long run costs
• Allocation of costs to product, overheads etc.
• Capacity utilization and its impact on total average cost per unit
• Benchmarking costs against industry competitors
• Relative percentage weighting of cost components

• Note: changing volumes can wreak havoc on profitability when looked at from the perspective
of fixed vs. variable costs. Be sure to understand what happens to fixed cost per unit when
volume declines (it increases) and how this can affect profitability in capital intensive
businesses.
• COGS: Raw Materials, Labour, Overheads
• Operating Costs: Sales & Distribution, marketing, general administration, R&D
• Identify the big “money buckets” in the industry you are examining – understand industry cost
structure – “smell the money”
• For Firm with multiple products how are fixed costs allocated – finding true contribution
Market Entry Cases
Market Entry Case – A possible approach

• You have
been asked to update the CEO of your client with the findings of the
team. What three points would you emphasize to the CEO?

• If we were to open a pure tennis court facility in Germany, we would need to

charge at least GBP 70 annual subscription to break even.

• We should only consider entering the German market after determining

whether we can differentiate our offering from the dominant 65% share market
player

• A number of broader issues should be considered such as regulatory

requirements, cultural issues, availability of funds to make investments
THE FOUR Cs

• Often used when contemplating capacity-building options, new product

introductions or entering a new market. Can be used for evaluating almost any
strategic initiative.

• Customers:
- Who are they and what do they want?
- What can they afford?
- What are they willing to pay for your product?
- Are their needs or tastes changing?
- Is the overall market growing or shrinking?
- How do they perceive the brand name?
- What is the Economic Value to the Consumer (EVC Analysis)?

• Overall, does a strong enough market exist to justify the proposed action?
THE FOUR Cs

• Competition:
- Who are they and what are their current offerings?
- How much market share do they have?
- How are their brand names perceived in the marketplace?
- Are they producing to capacity or do they have excess capacity?
- How do their cost structures compare to the client’s?
- How will they react to the client’s product introduction or capacity increase?
Refer to Porter’s Five Forces!

• Overall, is the competition currently strong enough or will their probable

reactions be enough to negate all benefit from the proposed action?
THE FOUR Cs

• Company:
- What are the client’s key strengths, resources and overall strategy?
- Are they congruent with what is needed to make the proposed action a
success?
- What are their Strengths, Weaknesses, Opportunity, and Threats
(S.W.O.T.)?

• Overall, how well suited is the company to carry out the proposed
action successfully and to benefit from it?
THE FOUR Cs - contd…

• Cost:
- Does the client have access to the funds required to take the proposed
action?
- What is the breakeven analysis?

• Cost is often overlooked when studying strategic initiatives, despite its

obvious importance. If the client can’t pay for it, it can’t do it – the case
is done. Don’t forget to address it!
THE FOUR Ps

• Useful when the case calls for the examination of product marketing, new
product development and/or introduction.

• Product: What is it? How does it differ from the competitors’?

• What are the competitive advantages of this product?

• Price: What will the price be? What are the competitors’ prices for competing
products? What discounts or other incentives will be offered? Will prices vary
across geographic lines? How much do the target customers value the product
(what are they willing to pay)?
• Will the product be priced at or below its perceived value?
THE FOUR Ps - contd…

• Promotion: How will the product be promoted/advertised?

• Will promotion be adequate to educate prospective customers of the product’s

existence?

• Place: [‘Place’ actually means ‘Distribution,’ but “Four Ps” has a better ring to it
than “Three Ps and a D”]. What distribution channels will be used (retail stores,
direct mail sales, an army of salespeople in plaid jackets selling door to door)?
What will the costs of this distribution be?

• Is the distribution strategy adequate the get the product sold at the anticipated
volumes?
PORTER’S FIVE FORCES

• Given how often you have heard (or will hear) about Porter’s Five Forces, you’d
think it would do your laundry for you. Well, it is powerful, but it’s best used for
determining the competitive strength of a particular industry or when evaluating
a strategic decision.

• How well a company will do (i.e., how good its profit margins and economic
returns will be) in a particular industry depends on the strength (power) of the
following five factors: (see next slide)

• In general, an industry is attractive (more profitable) if barriers to entry exist, if

there is little threat of substitutes, if the power of the suppliers and buyers is
weak, and if competition is rational within the industry
Presentation structure

Case Interview Guide

Case Interview – Steps 1

• Understand the Question:

- Be sure that you understand the question. If not, then ask for more information.
There’s nothing worse than an exquisitely structured analysis on the wrong
question.

- Ask the interviewer additional questions to add information as you flesh out the
problem-- Do not assume the first question the interviewer asks is the topic of
discussion. Rarely does an interviewer state the entire problem at the start. Part of
what is being tested is your ability to ferret out information.

- Interviewers generally will lead you down a path towards the answer they want. Be
open to hints they might be providing.

- Be careful about assumptions. Don’t make any that you don’t have to. If you have
to make assumptions, communicate to the interviewer that you are making these
assumptions and then why you are making them.
Case Interview – Steps 2

• You understand the question, now choose your framework:

- Choose an appropriate model. Don’t try to match a complex product/market
expansion matrix to a question that is easily answered with a simple SWOT
analysis.

- Stick to models that you know well. No one knows every model in existence. Learn
a few models very well that you can keep in your tool bag.

- Have a passing acquaintance with the most popular frameworks. On occasion an

interviewer will ask you to use a particular framework to analyze the scenario.

- Once you’ve chosen a framework, don’t announce your model to the interviewer. It
is expected that the interviewer will understand what you are doing, and telling the
person that you are using the value chain analysis will not help your case. This is
the exception to the ‘more communication is good’ rule.
Case Interview – Steps 3

• Analyze the case!:

- This is the meat of the matter. Using the framework you’ve chosen, conduct an
analysis.

- Ask questions to get more information; this cannot be overemphasized.

Communicate your thought process through the whole interview. Many interviewers
are very helpful and will assist you if they see you stray from the path.

- Be willing to change tack. Sometimes it turns out that you chose an unsuitable
framework for the analysis. Communicate to your interviewer what you’re doing and
that a different type of analysis is warranted. You might get dinged but you might
get points for being flexible.
Case Interview – Steps 4

• Arrive at a conclusion:
- Consultants don’t do much good if they can’t come up with an answer at the end of
an analysis. Be sure to arrive at some type of conclusion even if it is a framework to
further evaluate the problem.

- Include real recommendations for the company as applicable. Concrete actions are
much more impressive than vague strategies.

- Do a “sanity check”, i.e. address or consider any key variables where changes could
significantly impact your analysis and conclusion. Also ask yourself, “Does this
answer make sense?” Use common sense.
How do companies evaluate your case interview performance?–

• A case interview is used to assess many of the same characteristics

interviewers look for in the standard interview.

• Therefore, it is much more important that you clearly communicate your

abilities and fit with the company you are interviewing with, than that you
come up with the "correct" answer to the case.

• In general, the case interview will be used to evaluate you along three primary
dimensions:
- creativity and common sense,
- analytic ability and
- poise and enthusiasm
Judging creativity and common sense

• To get a sense of your level of creativity and common sense, the

interviewer will be judging your ability to:

- Conceptualize problems

- Develop innovative solutions to business situations

- Make assumptions, see patterns, generate hypotheses and draw

conclusions from only partial information
Judging analytic ability

• Your analytic ability will be assessed based on how well you:

- Provide structure to unstructured problems

- Simplify problems into their individual components

- Apply transparent and logical thinking to each component

- Synthesize all of the pieces into a logical solution

Judging your degree of poise and enthusiasm

• Last, the interviewer will be trying to get a sense for your degree of poise
and enthusiasm. It is important that you:

- Seem excited by the case, which is akin to the kinds of issues and problems
consultants face

- Be not intimidated nor daunted by the process or problem presented in the case

- Assimilate information quickly and effectively

- Ask insightful questions

There are no right answers but there are wrong approaches and reactions

• Forgetting important facts

• Dwelling on unimportant details

• Defending impractical solutions (it is OK to change your mind if you are in a

dead-end)

• Force-fitting a framework that just does not work

• Changing frameworks several times during the case

• Forgetting to do the "reality check" (test your conclusions using common sense)
Some Case Interview Tips

• If it helps you to structure your analysis or if the case is quantitative, take notes.

• Feel free to pause and collect your thoughts at any time (the pause won't seem
as long as you think to the interviewer and the time might help you
communicate your thoughts more clearly).

• Think out loud. The main purpose of the case interviews is to show the way in
which you analyze a problem, so let the interviewer hear your thought process
and any assumptions you make.

• Have fun. Nervous tension will come across in an interview. Try to relax and
think of it as an opportunity to explore the drivers of success for a company or
industry.
Some Case Interview Tips – contd…

• Think about the type of consulting projects the firm does. This might give you insight
into the type of case you are likely to get and the way in which you might structure
your analysis.

• Pay close attention to any hints (subtle or not) that the interviewer gives you,
particularly if they are trying to steer you back on course.

• Engage yourself and get excited about the case. The interviewer has probably spent
a few months working on the problem and consulting firms are looking for people
who enjoy solving problems.

• Do not ask for every piece of data; the more you prompt for data without assimilating
what you have and reaching conclusion, the more confused you could become. The
interviewer has tons of data or will make it up.

• Remember that some material may be extraneous

Presentation structure

Industries / LOBs
INDUSTRIES

• Business fundamentals are important, but there's no substitute for knowing an

industry inside and out.
Asset Management
Automotive
Banking & Capital Markets
Biotechnology
Chemicals
Consumer Products
Government & Public Sector
Hospitality & Leisure
Insurance
Media & Entertainment
Mining & Metals
Oil & Gas
Pharmaceutical
Power & Utilities
Real Estate (includes Construction)
Technology
Telecommunications
Transportation and Logistics
Industry Overview

• Key 18 industries to be prepared –

High growth, Media Focus, Appearing on Resume, Work Ex

• Major Dimensions
- Key Terms e.g. ARPU, Passive Infrastructure in Telecom
- Major Trends ,
- Value Chain,
- Business Model
- Recent news or activity
- Global best practices
- Competitor Dynamics
- Regulatory Changes

• Capital Line, Vault Guides, EBSCO

Compile 2 pager note on each industry,

Economic Overview

• Demographic Data
• Human Development Indicators
• Macroeconomic figures
• Consumer Statistics – Marketing White book
• Figures about industry/sector/areas appearing on resume

Countries – India, USA, UK and any other (as applicable)

Bulleted Word Document – Max 2 pages

Presentation structure

Skills
Skills interviewers look for

A Passion for Ideas.

- The ability to generate relevant ideas through rigorous thinking and careful research
- Enjoy problem ‑diagnosis, problem‑framing and problem‑solving.
- Have a great aptitude for numbers
• A Passion for Client Service
- Commitment to others and ability to excel in meeting client needs
- Those who demonstrate superior skills gain personal control early in their careers
- the individual needs to excel and generate his or her own marketability
• A Passion for People
- Consultants who enjoy talking to people do well.
- The gregarious do well with their teammates and their clients
- You could accomplish this by charm, humor, listening or hard ‑work, - it's vital that you
enjoy, understand and communicate with clients.
- Interviewers are looking for people that they'd like to work with themselves

The bottom line is that firms are screening for skills that match their needs. It is vitally
important that you make every effort to understand what these skills are before you step
into the interview room
Skills - continued

• Intellectual sharpness
- Tested through cases, and through the course of the interview
- Ability to handle not-so-well-defined problems; abstract concepts
- Comfort with data - variables, parameters, relationships
- Ability to pick up a thread / train of thought and take it forward
• Ability to relate work experience to other contexts
- Abstraction from particular experiences to generic principles
- Application of generic principles to specific instances
- Communication Skills; especially verbal
- Clarity in communication
- Language, choice of words
Presentation structure

Types of Consulting Firms

TYPES OF CONSULTING FIRMS

• Full Service (Advisory)

- Pricewaterhouse Coopers
- KPMG
- Ernst & Young
- Deloitte
• Business Strategy (Pure Play)
- McKinsey
- Booz Allen Hamilton
- Bain
- Boston Consulting Group
- Arthur D Little
• IT Focused
- Accenture
- AT Kearney
- IBM
- Infosys
CONSULTING SERVICES OFFERED – FULL SERVICE

• Accounting Advisory Services

• Business Performance Services
• Corporate Finance
• Financial Risk Management
• Forensic
• Internal Audit, Risk & Compliance Services
• IT Advisory Services
• Restructuring
• Transaction Services
• Reward
• HR Management
FULL SERVICE ADVISORY - EXAMPLES

Advisory services include assistance to clients in tackling core issues

such as:

• Addressing severe underperformance

• Best practice governance and corporate citizenship
• Efficiency and cost optimization
• Entering new markets
• Growth from transactions
• Managing the regulatory environment
• Optimizing organizational risk
• Value from major infrastructure projects and alternative assets
TRANSACTION ADVISORY SERVICES

• Accounting valuations
• Advice on fundraising
• Bid support and bid defense services
• Commercial and market due diligence
• Financial due diligence
• Independent opinions
• Post deal services
• Private equity advisory
• Privatization advice
• Structuring services
SERVICES OFFERED BY PURE PLAY – EG. MCKINSEY

• Business Technology Office

• Corporate Finance
• Marketing & Sales
• Operations
• Organization
• Risk
• Strategy
SERVICES OFFERED BY PURE PLAY – EG. BAIN

• Change Management
• Corporate Renewal
• Corporate Strategy
• Cost & Supply Chain Management
• Customer Strategy & Marketing
• Growth Strategy
• IT
• Mergers & Acquisitions
• Organization
• Performance Improvement
• Private Equity
SERVICES OFFERRED BY IT CONSULTING – EG. INFOSYS CONSULTING
Four Broad Areas of Consulting

• Strategy

• While most problem-solving involves some sort of strategy, there are

companies, groups, and assignments that are particularly focused on
high-level strategy development.

• Interpreted broadly, strategy includes the development of an overall

approach to improving a company’s competitive position across
multiple areas.
Four Broad Areas of Consulting

• Operations/Process Improvement

• A subset of strategy, operations focuses on improving the product or

service-generating part of the enterprise.

• MBA students tend to overlook the strategic aspects of this function

and its importance to the client organization.

• Their perception is that operations is not as glamorous as strategy,

when in reality operations can be quite strategic and is usually the key
to a successful organization.
Four Broad Areas of Consulting

• Change Management/Organizational Design

• Another subset of strategy, change management relates specifically to

human resource issues within organizations – emphasizing alignment of
- culture,
- people, and
- structure
• with
- strategy,
- products,
- processes, and
- technology.
Four Broad Areas of Consulting

• Implementation/Information Technology

• This takes the strategy development one step further by executing the
approach.

• For many consulting firms, this happens to be the “bread-and-butter”

part of the business, with a significant amount of revenue coming from
information technology integration
Presentation structure

Interviewing Tips
Interviewing Tips

• Know your resume. Be prepared to discuss any item on your resume (no matter how
innocuous you think it may be).

• Prior to the interview, make sure you have nailed down answers to the obvious
questions: why consulting; where do you see yourself in X years; what are two of your
strengths and weaknesses?

• Relax. Be calm. Do not get flustered during a case interview. Take time to frame your
answer and structure your response. Do not worry about making mistakes. Consulting
interviewers like to see you attempt to solve the problem.

• When you are given time to ask questions about the firm, use it well.
Intelligent and relevant questions demonstrate your interest in the firm. Think about how
many questions you would have if you were buying a new car or new home. You must be
able to generate and express this level of interest about the firm at which you are
interviewing. If you do enough research on the firm beforehand, you are better positioned
to ask key questions.
Interviewing Tips

• Keep the answers concise and full of content.

• Presentability
- Attire (Don’t go overboard, but must meet basic cut-off criteria)
- Grooming
- Body language
• Presence of Mind
- May attempt to throw you off and see how you react
- Eg. If you got a job simultaneously with Firm XXX, would you take our offer?
- Your understanding of what a consulting career involves
• Nature of work
• Lifestyle (travel, out-of-town assignments, demands on personal life etc.)
Interviewing Summary

• Remember that the interview is a sales pitch.

• What are they looking for in an interview?

• Consultants distill their interviews down to two questions:
- “Can you do the job?” and
- “will I enjoy working with you?” “

• They are trying to determine whether you are capable of doing the job and whether
they like you.
• You need to demonstrate that the answer to both is yes. How you do it is up to you
–, but each person must develop their own unique pitch
.