Why are Case Studies used?
Case studies are used to assess a range of skills which can broadly be summarised as your “commercial skill set”. For consulting case studies, this will typically be assessing your ability to solve business problems in a structured, logical fashion, making reasonable commercial assumptions as you go along and using your mental maths ability to synthesize these assumptions to find the answer. Note that they are not looking for a “right answer”; they are looking for a “right method”.
Types of case studies
Different industries need to test different skills and therefore depending on whether you’re applying to management consultancies, strategy consultancies or investment banking, your case study will be slightly different. Here are some examples of different approaches across industries;
- Management Consulting: tend to use “operational” type case studies (more details below)
- Strategy Consulting: tend to use “strategic” type case studies (more details below)
- Investment Banking: tend to use a very different case study compared to consultancies. Investment banking case studies are a lot more quantitative and tend to focus on reading financial statements and based on a corporate finance deal e.g. a company going public on the stock market. They usually need you to understand the rationale behind financial modeling e.g. DCF, LBO, etc.
- Private Equity: depending on the type of PE fund, it will align closely to an investment banking case study or a strategy consulting case study. Consider how they make money, do they follow an “operational improvement” model (a more strategic approach) or do they follow a “financial engineering” model (an investment banking approach). An easy way to find this out is by looking at the composition of the team, are they mainly ex-strategy consultants or ex-bankers?
How to answer the case study
Here we will focus on the consulting type case studies. There are four steps which will greatly increase your chances of success by helping you to structure your answer in an intelligent and commercially aware fashion.
The Ivy Case is a system created by a Harvard professor who coached students for interviews at top-tier consultancies such as McKinsey. He summarised that all case studies were a combination of the following 12:
Strategy Cases: Entering a new market, Industry Analysis, Mergers and Acquisitions, Developing a New Product, Pricing Strategies, Growth Strategies, Starting a New Business & Competitive Response.
Operational Cases: Operations Case, Increasing Sales, Reducing Costs, Improving the Bottom Line, Turnarounds.
To get it right, here is the top line method for structuring your case study:
1) Summarise the question: often the interviewer we give you a lot of excess verbiages to test your ability to see into the heart of the problem. The most important thing to ensure you start down the right path is for you to summarise and confirm the question with the interviewer.
2) Verify the objective: the first thing consultants do with clients is to define what “success” looks like to that client and to find out why that is the case. If the objective is “to increase profits”, ask questions such as: why is this important? And in what timeframe? Is there anything else we need to know? By asking these questions, it will not only show your sensitivity to the case and it could also uncover vital information.
3) Ask clarifying questions: very often the interviewer won’t provide all the necessary information to answer the question and it is up to you to find out this information before answering the question. Are we figuring out the profit per day, per month or per year? Is it for one store or all the stores? Of course, there is a limit to the number of questions you should ask but you must ensure you have the relevant information to make sensible assumptions.
4) Layout your structure: now that you know exactly what they are looking for you can begin to tell them how you find the answer. Once you have laid out the structure, you can begin to add your assumptions into the formula and use your mental maths to come up with a well thought out answer.
5) Follow the structure to come to your conclusion: It is important that you follow the steps you announced in 4). An easy way to come up with a logical structure is to memorize The Ivy Case – a set of 12 types of case studies and how to solve them. By following this, you won’t forget any elements and your answer will be concise and well-structured.
Tip: Making sensible assumptions: this is potentially one of the hardest parts to get right as it requires you to make a sufficiently detailed assumption without making it too complex that you will not be able to do the mental maths correctly to come to the right answer.