The Complete Guide to Your Case Interview Preparation

The Case Interview Basics cover step by step everything you need to know for successful case interviews. You’ll learn general information about case interviews, how to develop essential consulting skills, the different types of cases, and how to solve cases in a structured way.

Next, you’ll discover how to use frameworks effectively and confidently handle the key calculations in cases. The Management Theory & Terms section provides a compact collection of core concepts. Finally, we give you tips on how to apply what you’ve learned in peer-to-peer meetings ‒ for realistic practice and greater confidence in interviews.

This guide is the complete starting point for anyone looking to master case interviews and launch their consulting career.

Step 1 - General Info

How are case interviews structured? Why are they used in consulting recruitment? Find all the information here.

Begin with the key articles to get started:

Why Are Case Interviews Used in Consulting?

The case interview is one of the most challenging parts of the application process for consulting jobs. But why do companies prefer this method over traditional interviews? The answer lies in the many benefits case interviews offer — not just for you as a candidate, but also for the companies themselves. Let’s first explore why case interviews can be valuable for you before taking a look at the perspective of consulting firms.

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The Case Interview Format

When applying to top consulting firms, one of the most crucial stages of the interview process is the case interview. This format is designed to assess your analytical competencies, problem-solving skills, and ability to think strategically under pressure. Let's take a look at what to expect.

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The Personal Fit Interview

The personal fit interview is a crucial part of the selection process in consulting. It’s often underestimated by candidates who tend to focus on the challenging case interviews only. But the personal fit interview is just as important! It’s all about determining if you’ll fit well within the team and align with the company culture. Read this article to find out why the personal fit interview matters so much and how to prepare effectively.

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Be sure to check out the following articles to expand your knowledge:

Key Questions in the Personal Fit Interview Interviewer- vs. Candidate-Led Cases The STAR Method

Step 2 - Consulting Skills & Preparation

Discover the key skills you need for a successful consulting interview and how to improve them.

Begin with the key articles on consulting skills & preparation:

Skills Tested in a Case Interview

If you want to enter the consulting field, you probably already know how selective the industry is and that it only chooses the best and most outstanding candidates. Therefore, the application process is quite intensive and demanding. Case interviews are significantly different from traditional job interviews due to their complexity and specific requirements, as they simulate real business scenarios.To succeed in case interviews, certain skills are essential. These need to be improved and refreshed before the interview to ensure optimal performance. Below, we provide a brief summary of the essential skills you should master to excel in case interviews and differentiate yourself from the competition.

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Charts and Data in Case Interviews

When it comes to case interviews, data interpretation is a crucial skill that sets top candidates apart. Whether you're analyzing market trends, customer segments, or financial figures, your ability to quickly understand and communicate data-driven insights can make or break your performance. In this guide, we'll break down the process into three simple steps to help you excel in reading and interpreting charts and data during your interviews.Two Types of Data Interpretation in the Recruiting ProcessWhen preparing for your career in consulting, you'll encounter two primary scenarios where data interpretation comes into play:Solving specific tests (like the McKinsey Solve Game): This requires precise calculations and often involves mental math.Analyzing and communicating business insights: This is the core of case interviews, where you’ll need to interpret data, connect it to the case context, and use it to drive the discussion.This article will focus on the second aspect: how to analyze and communicate business insights in a case interview.If you're interested in improving your skills for specific tests, be sure to check out our resources on the McKinsey Solve Game and BCG Online Case.

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Practice With Peers

Preparing for case interviews is a crucial step for success in the consulting industry. These interviews are known for their complexity and the high demands they place on applicants. One of the most effective methods for preparing for case interviews is practicing with like-minded peers. PrepLounge offers excellent opportunities to find suitable interview partners for joint practice with the world's largest case interview community. This article highlights why practicing with like-minded peers is beneficial, how to optimally use PrepLounge's resources, and provides tips on how to get the most out of mock interviews. Why Practicing with Like-Minded Peers for Case Interviews is BeneficialPracticing case interviews with like-minded peers offers a variety of advantages. Firstly, it enables a realistic simulation of the interview situation. Since your interview partners go through the same process, they can authentically simulate cases, which helps you get used to the structure and dynamics of case interviews. Furthermore, like-minded peers can provide valuable and constructive feedback. This feedback is particularly relevant because it comes from people who also understand the challenges of case interviews and can give specific, relevant advice.Another advantage is mutual learning. By observing and analyzing others' approaches, you can refine your own thinking processes and develop new solution strategies. This leads to a deeper understanding and better problem-solving ability. Regular practice with like-minded peers also helps build confidence and reduce nervousness. The more you practice, the more familiar you become with the format and expectations of a case interview, which can significantly improve your performance.

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Practice with Coaches

When preparing for a case interview, especially under time constraints, working with an experienced coach can significantly enhance your chances of success.💡 Pro Tip: PrepLounge offers access to over 800 (former) management consultants from top firms like McKinsey, BCG, and Bain, who are ready to help you perfect your interview technique.

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Be sure to check out the following articles to expand your knowledge on consulting skills & preparation:

Note-taking in Case Interviews Case Leadership Stating the Recommendation Creativity Business Sense Presentation and Communication General Knowledge Preparation Plan Self Study

Step 3 - Types of Cases

Learn all about the different types of cases in consulting interviews and how to be well-prepared for every challenge.

Begin with the key articles on types of cases:

Market Sizing

Questions about market size are frequently asked in case interviews in consulting because they require a blend of logic, mathematics, and common sense. They can be asked as standalone questions or as part of a larger case. Applicants who are familiar with market sizing questions can really perform here. What Are Market Sizing Cases?If you're applying to top consulting firms like McKinsey, BCG, or Bain, you're unlikely to escape a market estimation case. Market sizing cases are considered "back-of-the-envelope" calculations because they can be done on the back of an envelope. Despite the name, it's not just about estimating market sizes; other estimations may also be asked for.For example, if you're discussing a British clothing retailer's growth strategy, you could calculate on an envelope how large the online clothing market is and what percentage of the market the retailer already penetrates. If you perform these calculations quickly, the conversation with the client stays fluid, leaving a good impression.You can receive the question about market size as a standalone case (although this is less common) or as part of a more comprehensive problem, such as market entry. The good news: There's no right or wrong answer when it comes to the question of market size. The interviewer is less concerned about the specific number you come up with for the market than the approach you took to arrive at that number. Why Are Market Sizing Cases Commonly Used in Consulting Interviews?Market Sizing Cases are used to test your quantitative and logical abilities. The interviewer wants to ascertain whether you work well with numbers and if you can make informed assumptions and deal with ambiguities. Questions about market size aren't just about the size of markets; they also involve other types of estimations, such as the number of golf balls in a jumbo jet. As you may have noticed, math is crucial in tackling these questions since you don't have a calculator to rely on. Most importantly, you need to be comfortable dealing with large numbers like millions and billions as well as percentages. More on that later. How Do You Best Approach Market Sizing Cases?Now that we understand the theory behind Market Sizing Cases and their relevance to your case interview, let's take a closer look at the process.Segmentation – The Key to Market Sizing CasesIf you've done some reading on case interviews before delving into market sizing questions, you might have come across areas where segmentation is necessary. Segmenting data is a crucial skill you must master as both a candidate in a case interview and in your later career as a consultant. Segmentation generally refers to dividing a larger whole into smaller parts or segments. The principle you need to understand to do this correctly is the MECE principle.MECE stands for "mutually exclusive, collectively exhaustive." Simply put, segmenting a group of data according to the MECE principle means forming subgroups that do not overlap but collectively cover the entirety of the data, meaning no data is missing. An example useful for market sizing questions is dividing a country's population into age groups (as different age groups often behave differently).Below is a breakdown into Group 1 in the age range 0 to 14, Group 2 in the age range 15 to 64, and Group 3 for everyone over 65: Note that none of the groups overlap, so no age is counted twice, but also no age is overlooked. Now that the population is correctly segmented, we can treat each group differently. If we had divided the population of the United Kingdom into the aforementioned groups, we could estimate clothing expenditures per person in these groups in online retail. Common sense suggests that expenditures per person in the 0-14 age group are lower than in the 15-64 age group. We can justify this estimation by noting that the majority of 0-14-year-olds do not purchase their clothing online.

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Market Entry

Market entry cases are one of the key issues in the consulting industry and present consultants and firms with unique challenges and opportunities. These cases require deep analysis and strategic planning to successfully enter new markets. Variants of Market Entry CasesMarket entry cases in consulting involve analyzing and developing strategies for a company’s entry into a new market. This includes analyzing the market potential, understanding the competitive landscape and assessing the risks and opportunities. The goal is to recommend the best approach for the company to successfully enter and succeed in the new market.Market entry cases have two variants:Market development: This involves introducing an existing product or service into a new market where the company currently does not operate. This strategy focuses on finding new market opportunities, understanding the local market, adapting the product or service to fit the new market, and using effective marketing and distribution methods to succeed in the new market.Diversification: Diversification takes place when a company introduces a completely new product or service into a new market. It is different from market development because it involves offering products/services that may be unrelated to the company’s current products or target markets.Market entry cases are often hidden in other case types, such as growth or profitability cases. For example, if you are confronted with a scenario in your case interview such as, “Our business model is currently stagnating. What should we do?”, it is imperative to consider various strategic options, including market development or diversification, to revitalize the business and drive sustainable growth. Use the Following Six Steps to Approach a Market Entry CaseBy following these six steps, you can systematically approach market entry cases, conduct a deep analysis and develop strategic recommendations tailored to the client’s objectives and the market. These steps serve as a guideline, but always remember to adapt your recommendations specifically to the company’s case and situation.1. Paraphrase and Clarify the Objective of the Case at the Beginning.This first step lays the foundation for the analysis and guarantees that the customer’s expectations are met. In this first stage, it is particularly important that you understand the reasons and background as to why the company wants to enter a new market, whether a market development strategy or a diversification strategy is to be followed and what challenges are involved.So, when the interviewer presents the case to you, make sure you listen carefully and take detailed notes. Start with paraphrasing the problem and clarify all questions with the interviewer to make sure you understand the problem correctly. Take a minute to structure your thoughts and decide what questions to ask based on the structure. Frameworks such as Porter's Five Forces can help you structure thoughts and systematically identify key information. But always make sure to adapt standard frameworks to the individual circumstances of the case.2. Understand the Client's Company.Gain a deep understanding of the client’s business, including its core competencies, products or services, market position and competitive advantages. Understand why the client wants to enter the new market and identify the key issue. Knowing this information will be important in giving a final recommendation.Important information to determine if the company is ready to enter the target market are:What are current revenue streams?What are the client's key strengths, weaknesses, opportunities and threats? (SWOT-Analysis)What is the product mix? How many and what types of product lines, brands, variations of products does the company have? What is the lifecycle of each product? Also, how closely related are the current products?Who are current customers, and how are they segmented?What are the current distribution channels?What is the client's current financial situation?3. Understand the Market of Interest.Understand the market the client wants to enter and evaluate its attractiveness. Using a structured approach, you can gain a deep understanding of the market, identify opportunities and risks, and develop strategic recommendations tailored to your client's needs. To analyze the new market, the following steps may be a useful guideline:Estimate the Market Size: If available, start by estimating the market size if that information is available. If not, be prepared to calculate the market size yourself in such cases.Evaluate the Growth Rate: What is the growth rate of the market? Is it expanding rapidly, stable or shrinking?Determine the Lifecycle Stage: At what stage of the lifecycle is the market? Emerging, Mature, Declining?Identify Customer Segments: Who are the customers in this market? What are their specific needs and preferences?Understand the Competitive Environment: Who are the key players in the market? What makes them stand out? What are their differentiating factors? Porter’s Five Forces can help you to analyze the competitive environment and the attractiveness of a market in a case study.Analyze Industry Trends and KeyTechnologies: What are current trends in the industry and the market? For example, are there movements towards digital solutions or sustainability? Is there any significant technology driving this market? How quickly is it changing?4. Evaluate the Financial Aspects of a Potential Market Entry.In this fourth step, analyze and evaluate the financial impact of entering the target market. By structuring the analysis into costs, revenue potentials, and rate of return, you can provide a comprehensive and organized approach to assessing market entry strategies. This detailed breakdown will help in identifying key financial factors and making informed strategic decisions:Costs:Barriers to Market Entry:Investment Costs: Identify initial capital required for market entry.Fixed Costs:Infrastructure costs: Costs associated with setting up a physical or digital infrastructure.Personnel Costs: All expenses that a company has for its employees.Variable Costs:Production Costs: Costs that vary with the level of production.Operating Costs: Daily operating costs, including utilities and operating resources.Revenue Potential:Product Pricing:Expected Pricing: Determine the expected sales price of the product or service you want to offer in the new market.Sales Volume:Expected Units Sold: Estimate the number of units expected to be sold within a specific time period.Rate of Return and Break-Even-AnalysisBreak-Even Point:Time to Break-Even: Calculate the number of years required for the clients to recover the initial investment and start generating profit.Rate of Return:Understand that money has a different value over time: Evaluate the net present value (NPV) to determine how the changing value of money impacts the investment’s profitability.Rate of Return Calculation: Evaluate the expected profitability of the investment, taking into account both the initial costs and the future revenue streams.5. Develop a Strategy for Entering the Market.If you decide that entering a new market is a good idea, it is important to develop a strategy for how to proceed. There are generally three ways to enter a market:Starting from Scratch: Independently establishing a business in the new market.Through a Joint Venture: Partnering with a local company to enter the new market together.Through Mergers and Acquisitions (M&A): Taking over an existing company or business in the target market.By considering these following factors and matching them to the company’s specific goals and circumstances, a well-grounded market entry strategy can be developed for successful entry into a new market:Competitive Advantage: Can you apply the same business strategy as in your current market, or do you need to adapt the product, marketing, or even sales channels to reach customers?Timing: Can you use a first-mover advantage, or would you rather let the competitors try their luck first?Speed of Entry: Define whether you want to test a single store or region, or cover the entire market at once.Entry Mode: How much commitment do you want to make? Would it be a simple export strategy, where you can exit easily but have less control, OR a 100% subsidy, where investment costs are high but you also have more control?Organizational Structure of the New Branch: Do you want to decide centrally or give the individual country manager a lot of freedom?6. Develop a Recommendation.Now that you know the company, the“old” and the "new" market, have successfully done all the analyses and got your answers, summarize them and give a recommendation based on the facts you collected. Don't forget to take another minute to structure your answer but make sure to provide your answer first and then the reasons! Use the Pyramid Principle to formulate a conclusion and appropriate well-grounded recommendations at the end of the interview. Key Takeaways – What to Consider when Solving a Market Entry CaseMarket entry cases are often hidden in other case types, such as growth cases or profitability cases.It is important to gain a deep understanding of the client’s business and the market the client wants to enter and evaluate its attractiveness.Analyze and identify the most important financial factors before developing a potential market entry strategy.When developing a market entry strategy, tailor it to the company's unique characteristics and objectives.Make sure that you present a well-grounded market entry strategy.Practice makes perfect: Connect with case interview partners and practice together. You'll get valuable feedback and improve your skills much faster than if you just study on your own. Find numerous case partners on our interactive Meeting Board and get started right away!

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Growth Strategy

In case interviews, you are often tasked with developing strategies to increase a company's revenue. It's crucial to conduct a systematic analysis to provide well-founded and actionable recommendations.Below, we’ll break down the key factors you need to consider and show you how to structure your response in a clear, effective way. Our goal is to give you a practical guide to help you ace your case interviews and build strong growth strategies. Key Factors for Revenue GrowthWhen developing growth strategies, the focus can vary. Here are some key factors to consider: ProductsProduct Mix: Analyze the product range and its life cycles.Example: A company selling clothing might expand its range to include sportswear in order to reach a broader target audience and create additional revenue streams.Market Growth: Examine the industry’s growth rate.Example: If the market for sustainable fashion is growing, a company specializing in sustainable products could increase its market share through targeted expansion.Customer Satisfaction: Consider how satisfied customers are with the products.Example: A smartphone manufacturer could gain valuable insights through regular customer satisfaction surveys and make product improvements to strengthen customer loyalty.PricingPrice Comparison: Compare prices with those of competitors.Example: An electronics manufacturer might compare its prices with those of competing brands to remain competitive and adjust pricing strategies.Price Sensitivity: Determine how sensitive customers are to price changes.Example: A luxury goods manufacturer could study how price changes affect demand for its products to optimize price adjustments and refine its pricing strategy.MarketingMarketing Strategies: Assess the effectiveness of current marketing channels.Example: An online retailer might increase its reach and boost sales through targeted social media campaigns and influencer marketing.Competitor Analysis: Analyze competitors' marketing strategies.Example: A food manufacturer could analyze competitors’ advertising strategies and stand out with innovative marketing ideas to gain market share.FinancialsAvailable Resources: Review the budget for growth initiatives.Example: A start-up might assess how much budget is available for product development and marketing to plan targeted investments in growth initiatives.Shareholder Expectations: Consider shareholders' expectations.Example: A publicly traded company might develop strategic measures to meet shareholder expectations for revenue growth and profitability, thereby strengthening investor confidence. Main Approaches to Revenue GrowthThere are two primary approaches to revenue growth: organic and inorganic.Organic Growth involves expanding distribution channels to reach new sales avenues and entering new geographic or demographic markets. This includes launching targeted marketing campaigns, optimizing existing ones, broadening product lines by introducing new products, and enhancing customer retention through stronger relationships and loyalty.Inorganic Growth focuses on mergers and acquisitions. This approach involves acquiring other companies to quickly integrate new markets or products and forming partnerships to leverage synergies and accelerate growth. Conclusion: Successful Growth Strategies for Consulting CasesIn case interviews, it's crucial to identify the right growth strategies. A detailed analysis of products, pricing, marketing activities, and financial resources will help you effectively utilize both organic and inorganic growth approaches. With a structured and well-founded approach, you can present convincing and actionable solutions. Good luck with your case interview preparation!Do you have a question about growth strategy cases that we haven't covered in the article yet? No problem! Just ask our experienced coaches in our Consulting Q&A.In our Case Library, you'll find not only case studies on growth strategy but also numerous other relevant topics such as market analysis, market entry, restructuring, and much more. Why not take a look inside? 🚀

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M&A Cases

M&A cases are quite common in management consulting, especially for candidates applying to firms with a focus on strategy, corporate finance, or (of course) mergers and acquisitions. While they don’t make up the majority of cases, they are frequently used to assess your strategic thinking, ability to analyze financial data, and understanding of the impact of complex business decisions. What Are M&A Cases?In an M&A case, you analyze whether a merger, acquisition, or divestiture makes sense for a company. To do this, you examine market conditions, financial metrics, competition, and strategic synergies to provide a well-founded recommendation.Growth strategy cases often lead to M&A considerations. Companies with excess capital may seek acquisitions to expand—whether through vertical integration (suppliers or distributors), horizontal integration (competitors), or diversification. The key factors for a successful M&A deal are value creation and cultural fit.A typical M&A case prompt:"Your client, a mid-sized retail chain, is considering acquiring a smaller competitor to expand market reach and increase profitability. Analyze the strategic rationale, financial implications, and provide a recommendation. What factors would you consider?" How Can You Approach an M&A Case – Key Areas to AnalyzeFirst of all, there is no standardized approach or pre-made framework that you can use for all M&A cases (or cases in general). It is absolutely crucial that you understand your client’s unique situation and develop a tailored solution for the task at hand.It is also possible that your M&A case does not resolve the question if a deal should be aimed for or not, but rather focuses on issues in the post merger integration process. Therefore, it is absolutely crucial that you listen carefully during the case prompt, reassure yourself that you understand the problem and objective of the client correctly and adjust your approach accordingly. 1. Understand Your Client’s Company.Before you dive into your M&A analysis, you first need to understand your client’s company. In which industry does the client operate? What product or service do they offer? Who are the key customer segments, and how is the company structured? Does the client have other business units that could offer synergy potential in the context of an M&A deal?Once you truly understand your client’s business model, it will be much easier to develop a structure for your M&A analysis. Even the simple question of whether you're advising a manufacturer or a service provider can help you form solid hypotheses about the deal’s objectives. For a service company, gaining access to talent may be an obvious reason for acquiring another firm, whereas a manufacturer might be more interested in creating cost synergies through vertical integration.But be careful not to jump to conclusions too quickly. You need to understand your client’s specific situation in order to provide valuable, tailored advice. 2. Understand the Objectives of the M&A Deal.Begin by clarifying the objectives of the M&A deal. Analogous to making a purchase at a grocery store, M&A can generally be viewed as a "buying decision". We know that a consumer first determines the "need" to buy a product. There are various objectives that a company may have for pursuing an M&A deal and understanding the strategic rationale behind the acquisition is crucial. Let’s take a look at potential reasons for M&A deals:Strategic acquisitions generally aim at improving the market position and realizing growth opportunities. Entering new geographic markets or industries, diversifying into new product lines, or reaching new customer segments are common ways to broaden market reach and strengthen the market position.Defensive acquisitions, also known as "defensive mergers" or "defensive takeovers," refer to strategic actions taken by a company to proactively protect itself against potential threats or risks. These acquisitions are typically pursued to secure the company's competitive position and reduce specific vulnerabilities. An example for a defensive acquisition would be purchasing or merging with competitors in the industry to consolidate market share and increase barriers to entry. By eliminating rivals or reducing competitive pressures, the acquiring company can protect its market dominance and pricing power.Synergies and value creationWhilst most mergers and acquisitions are evaluated with mid- to long-term objectives, opportunity-driven M&A deals are also an option. If a company is undervalued due to ineffective management or an unfavorable market, it may become an attractive acquisition target for a buyer with the power to bring it back to its potential value.It becomes clear that the reasons for M&A deals are diverse and it is impossible to list them all. So, when identifying the objectives of your client, start at a high level, dig deeper when you receive the feedback from your interviewer that you are on the right track and communicate your hypothesis and logical thinking very clearly. 3. Analyze the Target Industry.Once it's clear why the client is interested in acquiring a particular company, start by looking at the industry the client wants to buy. This analysis is crucial since the outlook of the industry might overshadow the target's ability to play in it. For instance, small/unprofitable targets in a growing market can be attractive in the same way as great targets can be unattractive in a dying market.Potential questions to assess are:How big is the market?What are the market’s growth figures?Can the market be segmented, and does the target only play in one of the segments of the market?What is the focus? Is it a high volume/low margin or a low volume/high margin market?Are there barriers to entry?Who are the key competitors in the market?How profitable are the competitors?What are possible threats?Porter's Five Forces can be a good starting point for a structured market analysis, but don’t use this framework as it is (and absolutely never mention its name in the interview; just think of what would happen if a company paid McKinsey for a market analysis and the $4,000 daily rate consultant came back with Porter’s Five Forces). Understand the framework as a helpful tool and adjust it to the individual scenario and market conditions your client is facing. 4. Analyze the Target Company.After analyzing the target industry, understand the target company. Try to determine its strengths and weaknesses (see SWOT analysis) and perform a financial valuation to determine the attractiveness of the potential target. You are technically calculating the NPV of the company, but this calculation is most likely not going to be asked for in the case interview. However, having the knowledge of when it is used (e.g., financial valuation) is crucial. The following information can be analyzed to determine the target attractiveness:The company’s market shareThe company’s growth figures as compared to that of competitorsThe company’s profitability as compared to that of competitorsHow can current businesses from the client leverage revenues and profitability from the business to be acquired (keyword synergies)?Does the company possess any relevant patents or other useful intangibles?Which parts of the company to be acquired can benefit from synergies?The company’s key customersValuationHow much is the target company asking for, and is the price fair (see cost-benefit analysis)?Can the acquiring company afford to pay the valuation?Financial valuation will generally include industry & company analysis. 5. Analyze the Feasibility of the M&A.Finally, make sure to investigate the feasibility of the acquisition. Take a look at the challenges and risks associated with the deal and get a clearer picture of the concrete conditions for a potential acquisition or merger.Important questions here are:Is the target open for an acquisition or merger in the first place? If not, can the competition acquire it?Are there enough funds available (have a look at the balance sheet or cash flow statement)? Is there a chance of raising funds in the case of insufficient funds through loans etc.?Is the client experienced in the integration of acquired companies? Could a merger pose organizational/management problems for the client?Are there other risks associated with a merger? (For example, think of political implications and risks of failure, like with the failed merger of Daimler and Chrysler.) 6. Give a Recommendation.At the end of your analysis, give your client a solid recommendation of what to do. Start with your answer first: Should the client acquire the target company or not? Should a merger be pursued or not? Then go on with the reasons behind and structure your recommendation logically. In most cases, three arguments to support your recommendation will be a good number. Prioritize them and communicate them on point.But note: Even though you want to give a clear recommendation at the end of your case, answers to M&A questions are usually more complex than a simple “yes” or “no”. If you want to shine in your interview, demonstrate that you are aware of the risks and challenges the decision of your client may entail. Mention them shortly and give an outlook on further analysis you would conduct to confirm your recommendation.

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Valuation Cases

Understanding how to determine a company's value is a crucial skill in strategy consultingstructured approach to valuation is essential. While full-scale valuation analyses are rare in case interviews, you may still be asked questions like, "How much would you pay for company XY?" or "Is this offered price reasonable?" Let's take a closer look on how to approach valuation in a case interview: The Most Common Methods of Valuing Are the Discounted Cash Flow (DCF) and the Industry Multiple MethodSince case interviews are designed to test structured thinking rather than financial modeling skills, you won’t be expected to conduct a full valuation. Instead, you’ll likely need to estimate the worth of a company, product, patent, or service, often with limited data. Your task is to provide a logical and well-reasoned valuation rather than an exact figure.Discounted Cash Flow MethodThe first valuation method is the Discounted Cash Flow Method. This method shows how much money you would have in your savings account at a certain interest rate in order to provide you with the same annual cash flow generated by the company that is being evaluated.To calculate this, you divide projected annual cash flows by an appropriate discount rate (or interest rate). Naturally, the discount rate for a business investment is higher than that of a savings account because investing in a company carries more risk.👉 For more details on how to use the Discounted Cash Flow (DCF) method, have a look at our Net Present Value (NPV) lessonIndustry Multiple MethodThe Industry Multiple Method provides a relative valuation by comparing a company to similar businesses in the industry. This is especially useful when additional factors—such as brand value or strategic positioning—affect valuation beyond simple cash flow calculations.For example, football teams are often overvalued compared to their financial returns because their brand, fan base, and sponsorship potential add intangible value. The industry multiple method accounts for such variations.The process involves:Identifying a relevant financial metric (e.g., revenue, EBITDA, or book value).Finding the average multiple for similar companies (e.g., P/E ratio, EBITDA multiple).Multiplying the chosen metric by the industry multiple to estimate value.Example: Price-to-Book Ratio (P/B)If a company’s assets are valued at $200 million but it was sold for $100 million, the price-to-book ratio is 0.5 (100M ÷ 200M). By averaging this ratio across comparable companies, you can estimate a reasonable valuation for a target firm.Other commonly used valuation multiples include:Price-to-Earnings Ratio (P/E)EV/EBITDA MultipleSince precise calculations aren’t required in case interviews, you don’t need to memorize industry-specific multiples. However, a rough understanding can help:A typical industry multiple can be EBITDA × 10.Discount rates vary from 3% (inflation level) to 20% (high-risk investments). Key TakeawaysUse the Discounted Cash Flow (DCF) method to value a firm based solely on its expected profits.Use the industry multiple method to double-check if the DCF valuation is reasonable. Sometimes other aspects need to be factored in like brand value, customer loyalty, liabilities, etc.There are several types of industry multiples to choose from. For more precise valuation, choose more types of industry multiples.Practice M&A cases to optimize your valuation-techniques:

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Profitability Cases

There are several common case types that occur in case interviews for management consulting roles. Profitability cases are some of the most frequent ones. These cases require a structured approach, analytical thinking, and a deep understanding of business fundamentals. Let’s take a look at what profitability cases actually are and how you can approach them successfully. Profitability Cases – The Number 1 Reason for Most Consulting ProjectsOne of the most common reasons why firms instruct consulting firms with their projects is that they struggle with their profitability. As a consultant you will have to diagnose the underlying issues, come up with potential solutions and recommend actions to improve profitability.As a candidate in a case interview, the task is pretty much the same, but on a smaller scale. The good news is: Once you have understood the basic structure of profitability cases, you can solve them no matter the industry or concrete business scenario. The underlying concept is always the same and not very difficult.Profitability issues always stem from falling revenues, rising costs, or both. It is as simple as that. Your task will be two-fold: Perform a structured and quantitative analysis of the data to isolate the problem, and then find a promising solution. In most cases, you can use the profitability framework to structure the problem, but make sure to not blindly apply it, but to really understand the problem at hand and make adjustments as needed in the concrete business scenario. The Profitability Framework – A Basic Tool to Structure Your Profitability CaseThe Profitability Framework is a fundamental tool for approaching profitability cases. It is basically an issue tree that breaks down profitability into its key components: revenues and costs.In the first place, this equation is pretty straightforward and not complicated at all. Next, it is your task to understand each side of the equation and identify the cause for declining profitability. There could be three reasons:Revenues have been declining.Costs have been increasing.Revenues have been declining and costs have been increasing.(Always make sure to remember this option. It happens pretty easily that candidates identify either revenue or cost issues as the problem, completely focus on one side of the issue tree and forget to zoom out again, take a look at the big picture and consider the other side of the equation as well.)So, the first question to get an answer to is “Have revenues been declining?”, “Have costs been increasing?”, or “Have revenues been declining and costs been increasing? And if so, which one is the bigger problem?”. Whenever you get the information that something has changed: quantify it! Ask by how much and in what time period. Depending on the answer, you will know on which side of your profitability tree you need to start your analysis. Always start with the most relevant driver (Pareto Principle).💡 Pro Tip: When trying to find out where to start your analysis, keep in mind to communicate like a consultant. A Bainie would not go to the client and bluntly ask “Have your revenues been declining?”, but rather formulate a question like “How have your revenues been developing over the past five years?”. It may be possible that your interviewer will then share an exhibit with you that not only contains revenue information, but also valuable insights on product lines, geographies or other relevant data, which you can use throughout the case. Scenario 1: Revenues Have Been DecliningLet’s assume, the profitability problem stems from declining revenues. There are many potential reasons for this and you need to find out which one applies in order to come up with a solution. Most important for your analysis is to stay structured at all times.1. Understand How the Business Makes RevenueTo structure your analysis of declining revenues, you need to understand the business model of the company you advise. So basically answer the questions:How does this company make revenue?What does the revenue consist of?Which component of the revenue has been declining?Understanding your client’s business model is absolutely crucial for your revenue analysis. Only when you know which products the company sells and which customers it serves, will you be able to give solid advice on how to solve profitability problems.2. Break Down the Revenue into its Single ComponentsOnce you have understood the general business model of your client, you can go on and break down the revenue into its components. Depending on the business model of the company, the equation can differ.Let’s take a look at some examples depending on different industries:Manufacturing and Retail IndustryRevenue = Number of Units Sold × Selling Price per UnitNumber of Units Sold: The total quantity of products manufactured or sold to customers.Selling Price per Unit: The price at which each unit of product is sold to distributors, retailers or customers.Subscription-Based Services (e.g., Streaming Services, Software as a Service)Revenue = Number of Subscribers × Monthly Subscription FeeNumber of Subscribers: The total number of customers who subscribe to the service.Monthly Subscription Fee: The amount charged to each subscriber on a monthly basis.E-commerce IndustryRevenue = Number of Transactions × Average Transaction ValueNumber of Transactions: The total number of orders placed by customers.Average Transaction Value: The average amount spent by customers per transaction.Advertising Industry (e.g., Digital Advertising, Print Media)Revenue = Impressions or Clicks × Cost per Impression or ClickImpressions or Clicks: The total number of times an ad is viewed or clicked by users.Cost per Impression or Click: The cost charged to advertisers for each impression or click generated.Hospitality Industry (e.g., Hotels, Restaurants)Revenue = Number of Rooms or Seats Occupied × Average Room Rate or Meal PriceNumber of Rooms or Seats Occupied: The total number of rooms booked or seats occupied by guests.Average Room Rate or Meal Price: The average price charged per room or meal.It becomes obvious that there is no one-size-fits-all-solution for a revenue analysis. You need to adjust your approach according to the client’s business model and needs.3. Analyze the Single Components of the Revenue ModelOnce you have a clear picture of what the revenue of your client is composed of, you can go on with your analysis by focusing on the component of the equation that appears to be the problem. For example, if your client is a manufacturer with declining revenues, you should find out if the number of units sold has been decreasing or the selling price per unit has been lowered (or a combination of both).If the number of units sold has decreased, you go on with a further analysis on the reasons behind. These can be manifold, so make sure to stay structured and use segmentation to get to the root cause of the problem.The segmentation you use needs to be customized to the case at hand. Make sure to let your interviewer know your thoughts and guide him or her through the case. That way, you will usually get valuable hints on which direction to go.Examples for segmentations are:Product segmentation: Product types? Price ranges? Packaging sizes?Customer segmentation: Small / medium-sized / large businesses? Age groups? Sex? Income groups?Market segmentation: Geographies? Industry verticals?Channel segmentation: Distribution channels?If you’ve found the biggest driver of the problem, you oftentimes have to switch to a more qualitative framework (for example the 4 Cs) to find the underlying root cause. For example: when you have less revenue, but the price is the same and units sold dropped, you have to find out why. Is there a new competitor on the market? Do you have quality problems, or did you just stop a marketing initiative that you ran for years prior to this drop?The same procedure applies if pricing seems to be the issue for declining revenues. “Let’s increase prices” might be an easy recommendation to give, but most likely too easy to be valuable. It is crucial to understand first, why prices have decreased and again, the reasons might be diverse. Make sure to use a structured approach in order to pinpoint the exact problem.Possible reasons and forces for decreasing prices may be:Internal:Increased Supply: Overproduction or excess inventory can lead to discounted pricing to clear out stock.Competitive Pricing: Aggressive pricing strategies by competitors can force companies to lower prices to remain competitive.External:Price Sensitivity of Customers: Changes in customer price sensitivity and purchasing behavior can influence demand and pricing strategies.Market Saturation: Increased competition and market saturation can lead to price wars and downward pressure on prices.Economic Conditions: Economic downturns or recessions can impact consumer purchasing power and demand for products.Exchange Rates: Fluctuations in exchange rates can affect import/export prices and overall cost structure. It may not be surprising that when looking out for the reasons of the client’s revenue problem, staying structured is most important. Come up with solid hypotheses and validate or neglect them in the dialogue with your interviewer and based on the data that will be provided to you throughout the conversation. This requires flexibility and spontaneity, so learning frameworks by heart will not help you here. It is important to internalize the way of thinking a consultant uses and solve cases with peers to put it into practice.👉 To find like-minded candidates for mock interviews, take a look at our Meeting Board and simply accept one of the open invitations.

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Be sure to check out the following articles to expand your knowledge on types of cases:

Brainteaser Pricing Competitive Response

Step 4 - Case Structuring

Understand why a clear structure is crucial in case interviews and how it helps you solve complex cases efficiently.

Begin with the key articles on case structuring:

Approaching a Case

Case interviews can be overwhelming, but they are one of the most important parts in the hiring process. These interviews allow companies to assess your problem-solving skills, your ability to structure complex problems, and how well you communicate your solutions.A case interview isn't just about finding the "right" answer – it's about how you think. The best way to approach any case is to stay organized, break the problem into manageable parts, and explain your thinking clearly. In this guide, we'll walk you through the key steps to excel in a case interview, avoiding common mistakes, and standing out against the competition. Why Case Studies Matter in InterviewsCase studies are used in interviews because they simulate real business challenges, testing your ability to solve difficult problems under pressure. More than your technical skills, interviewers are looking for:Problem-solving abilities: Can you break down a complicated issue into smaller, more manageable parts?Prioritization and management: Can you identify the most important elements of a case and address them first?Communication: Are you able to clearly and logically explain your thinking process?Your performance in a case interview shows how you think on your feet and whether you'd be able to handle the challenges that arise in the job. A structured approach to the problem is key, and this is where your preparation can really pay off.

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How to Build a Good Structure

Poor structure, or sometimes no structure at all is one of the main reasons why candidates fail in case interviews. Why? Because case interviews are designed to simulate real-life consulting scenarios. And in the real consulting world, you need to structure problems all day long. If you cannot clearly demonstrate this skill during your interview, you probably won’t be able to apply it on the job and therefore not succeed in a consulting career. But let’s stay positive: Structuring skills can be learned. With some basic principles in mind and lots of practice afterwards, you will be able to excel in this consulting-crucial discipline.

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How to Communicate Your Structure

To be convincing in case interviews, it is important not only to have a well-thought-out structure, but also to communicate it clearly and effectively. Here is a guide on how to achieve this using a top-down approach. We will provide helpful tips and approaches using the following case study example! 🚀Case Prompt:"Our client is a consumer goods company looking for growth opportunities. They are considering extending their existing baby products brand to a new product category - baby clothing. They expect this business to generate over 300 million USD in annual revenue from the first year. Should our client enter the baby clothing market?"👉 By the way, you can solve the entire case here:

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How to Practice Structure

Case interviews are a central component of the consulting application process. Success in these interviews requires not only analytical thinking, but also the ability to solve problems in a structured manner. Many candidates rely on standardized frameworks, but these alone are often not enough to distinguish themselves from the competition.💡 In this article, we will show you how to effectively practice structuring to succeed in your case interviews.

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Step 5 - Frameworks

Discover proven frameworks that help you approach cases in a structured way and systematically reach a convincing solution.

Begin with the key articles on frameworks:

Issue Tree

The Issue Tree is a valuable tool for analyzing the causes of issues during a case interview. When faced with a complex issue, the Issue Tree helps you break it down into its components. By focusing on the most urgent aspects and employing a hypothesis-driven approach, you can progress more quickly—a skill highly valued in consulting. 🚀🔎 In this article, you'll learn how to effectively use the Issue Tree, understand the differences between problem-based and solution-based trees, and how to leverage this technique to excel in your case interviews. Problem-Based Tree vs. Solution-Based TreeIn case interviews, two main types of Issue Trees are utilized:Problem-Based Tree: This helps you identify and understand the root causes of the issue and why it occurred in the first place.Solution-Based Tree: This is used to develop recommendations and clarify how the issue can be resolved.Ensure that the issues are MECE (mutually exclusive, collectively exhaustive). Otherwise, it will be challenging to address each area effectively. Use a hypothesis-driven approach to tackle the most significant issues first (see Pareto Principle).In consulting, the preferred approach is "answer-first" or "results-first." This involves starting with the main solution or conclusion and then working out the rationale. This is closely related to the Pyramid Principle.💡 Prep Tip: Practice these and other essential frameworks with our drills!

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MECE Principle

MECE is a buzz word in consulting and is often used in preparation for case interviews.But what is behind the acronym? This article takes a closer look at the MECE principle, its meaning and examples of its use. MECE Is a Best Practice Method for Structuring Case InterviewsMECE is a way of segmenting information into sub-elements that are Mutually Exclusive and Collectively Exhaustive. In other words, elements should “exclude” each other, i.e. be distinct, and should “exhaust” the relevant field, i.e. contain everything that belongs to it.The MECE framework as a method should be used when you craft an issue tree for your case structure. Doing so will help you avoid dependencies between different branches of the tree, and thus sub-problems can be properly isolated.Mutually Exclusive (ME): aims at reducing complexity by avoiding overlaps. You need to make sure that the possible solutions or groups are not accidentally considered twice. Proving exclusiveness forces you to carefully look at each option, consequently leading you to a much deeper understanding of the issue.Collectively Exhaustive (CE): aims at ensuring a comprehensive collection without leaving alternatives. Exhaustive means that all possible options have been considered. The trick is to divide a problem into categories with a finite number of general groups. For example, if you need to make “means of transportation” MECE, don't start just collecting “per foot, train, plane, bicycle, etc.” Try to find categories, because this practice will prevent you from forgetting important options: wheels vs. no wheels OR air vs. water vs. land. Difference between MECE and Non-MECE – A Simple ExampleA simple example for a MECE breakdown is dividing the population into subsets of age:A group of people below 50 years and another group of 50 years and above is MECE. No person can be in both groups - mutually exclusive - but every person is in either one of them – collectively exhaustiveA group of people below 50 years and another group with people from 40 to 70 years is not MECE, as people from 40 to 50 years belong to both groups - they are not mutually exclusive – and people above 70 are in neither one of the groups – they are not collectively exhaustive. A very common mistake made in this context is to differentiate between people below the age of 50 and people above the age of 50, but this does not include people who are exactly 50 years old.The MECE methodology is very famously used at McKinsey and other top consulting firms all over. Interviewers will especially evaluate whether you are able to structure information in a MECE format – a skill you will not only need in your case interview, but also in everyday life as a consultant. Many well-known frameworks, such as the Cost-Benefit-Analysis, 4Cs, or Porter’s Five Forces are designed with the MECE principle in mind. Use the MECE Principle in Profitability Cases to Split Costs in an Issue TreeThe MECE principle is not only applied for structuring information, but also helpful for simplifying calculations. Questions that require calculations are common in interviews as they are a good way to test your logical thinking and basic math skills. For example, it may be necessary to analyze the cost structure of a company in order to identify the root cause of a profitability problem. A good approach to tackle this task would be to break down the total costs into its single (MECE) components as you can see below: If as a next step you want to calculate the total costs, it is easiest to start at the bottom of your issue tree and carry out the first calculation. Take the result of that calculation and work your way up the tree until you have got the final costs. It is much easier to break down your problem like that than trying to do everything at once. Each calculation can be done in your head (if you need some practice, check out our Mental Math Tool) and is not overly complicated. When you have followed the MECE principle and made some valid assumptions for the actual numbers, your result will most likely be quite accurate (if you have made a sanity check and feel like it is not, it is also easy to look for the mistake by going through the structure of your tree again).

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Porter's Five Forces

Porter's Five Forces is a powerful framework that helps companies and consultants assess the competitive landscape of a market. By analyzing five key factors - competition, threat of new entrants, threat of substitutes, buyer power and supplier power - you can determine the attractiveness of a market and its potential profitability. This tool is essential for anyone who wants to gain a strategic advantage when analyzing case studies in case interviews. Porter's five forces are especially relevant for market entry cases, since you need to assess the market attractiveness here. Simplify Market Analysis with Porter’s Five ForcesA market is defined as a particular industry in which similar products are sold. Analyzing the competitive environment of a market can be quite difficult due to the numerous factors that need to be assessed. However, Porter's Five Forces Framework proves to be an effective tool for overcoming this complexity. This model evaluates five critical forces that determine the attractiveness of a market. In highly competitive markets, companies often have to invest significantly more resources to maintain their position, making these markets less attractive. The following schematic shows the elements of Porter's five forces:Analyze the Five Market Forces and Their ThreatsWhen analyzing an industry, gather data on the five forces and evaluate their potential influence on the market. During a market analysis in a case interview, focus on asking targeted questions to effectively assess the strength of these forces.Negotiating Power of SuppliersThe negotiating power of suppliers is defined as the amount of leverage the suppliers have for selling their products. A high negotiating power often leads to higher prices or lower quality, thereby lowering the potential margin of the industry.Here are some indicators that a supplier wields significant negotiating power:Relatively lower threat for a supplier to get acquired by another company.High switching costs for a buyer to change suppliers.Availability of only a few suppliers (or high concentration of few suppliers).Highly specialized supplies, no substitutes for the supplied good.Negotiating Power of BuyersThis concept is analogous to the supplier power discussed above. If buyers have a lot of negotiating power, it generally implies strong leverage to enforce low prices.Here are some indicators that a buyer wields significant negotiating power:High danger of backwards integration or an ability of buyers to produce the product easily.Low switching costs.High concentration of customers or only a few customers relative to a number of suppliers.Large volumes of products bought by a single buyer.Better or easy alternatives for buyers to switch.Threat from New Market EntrantsThe lower the barriers for market entry, the easier it is for new competitors to enter the market thus leading to higher competition and thereby increasing the risk of price wars and a lower margin. Hence, an attractive industry usually has high entry barriers. It is hard to enter an attractive industry, but once a company is able to enter, it is in a good shape.Market entry barriers:Economies of scale because new entrants sell lower volumes and face higher costs per unit.High learning effects because established players’ experience leads to better contracts, operations and customer relationships.High capital intensity and investment costs.Governmental regulations.Competitive environment.Low accessibility to suppliers and customers.Threat of Substitute ProductsSubstitute products are alternatives to products that are obviously different but fulfill the same customer needs. The more substitute products, the easier it is for the customers to switch, thereby leading to a more competitive environment.Following are a few indicators for a high threat of substitute products:Current products are old and at the end of the product life cycle.High comparability of replacement products and high visibility as a replacement.Similar prices.Competition within the IndustryThe level of industry rivalry is influenced by the remaining four forces of Porter, but is also subject to other causes. A high rivalry appears either as competition in terms of price or in terms of quality.Signs of high rivalry:Very similar products.High number of market players competing against each other.Low or shrinking growth as competitors fight over a saturated market.High barriers of exit due to high sunk costs. Using Porter's Five Forces in a Case InterviewBe cautious when applying Porter's Five Forces in a case interview. Interviewers may perceive the use of this framework as a last resort, indicating that you lack a more suitable structure for the solution. Ideally, you should integrate the Five Forces within a broader analytical framework (e.g., a cost-benefit analysis).This approach will demonstrate to the interviewer that you are not simply forcing the case into a specific model but are instead employing a well-considered and relevant methodology. Key Takeaways to Remember About Porter's Five ForcesFramework Overview: Porter's Five Forces evaluates industry attractiveness by analyzing competitive pressures: competition, the threat of new entrants, the impact of substitute products, and the bargaining power of suppliers and buyers.Industry Attractiveness: Strong forces typically reduce industry attractiveness and profitability. Porter's five forces are especially relevant for market entry cases.Integrated Approach: Combine Porter's Five Forces with other frameworks for a more comprehensive analysis in a case interview.Practice Makes Perfect: Perfect your skills by teaming up with case interview partners for regular practice sessions. Receive valuable feedback and sharpen your abilities together. Discover numerous case partners on our interactive Meeting Board! You are looking for cases to practice Porter’s Five Forces with?Check out our recommended resources or browse the Case Library for all cases on this topic.

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Pyramid Principle

The Pyramid Principle, created by Barbara Minto, an ex-McKinsey consultant, improves clarity and impact in communication. This principle is the basis of most management consulting communication and is especially useful for making decisions and solving problems. By organizing ideas logically and hierarchically, it helps the audience easily understand and remember key messages and recommendations. The Concept of the Pyramid PrincipleThe Pyramid Principle is about structuring information in a top-down approach. The main message or conclusion is presented first, followed by supporting arguments, data and facts. This structure reflects a pyramid where the most important point is at the top and is supported by broader base layers of information. Use the pyramid structure to provide summaries or recommendations at the end or in between your case interviews.The Pyramid Principle consists of three parts: 1. Key Message: The AnswerFirst, present your key message or conclusion to the interviewer. This approach immediately grabs the attention and provides a clear direction for the information that follows. It should be clear, logical and effective.2. Supporting ArgumentsThis level contains the main arguments or ideas that support the key message. You sound more structured and prepared when you focus on three main arguments directly below the key message. Group and summarize them logically. Each group should relate directly to the recommendation.3. Supporting Data and FactsOnce you have made your point, you can move on to the next level and start sharing the work behind your conclusion. This level contains more detailed information, data and facts to support the key message of the first level. Each main point is broken down into more specific sub-points here. Benefits of the PrincipleThis Framework offers several key benefits for structuring communication effectively:Clarity: The pyramid principle ensures that the audience understands the essentials right from the start by anticipating the main message. This reduces ambiguity and improves understanding.Focus: The hierarchical structure keeps the communication focused on the most important information, avoiding unnecessary details that can distract the interviewer.Efficiency: The logical flow and clear organization of the ideas save time for both the speaker and the interviewer. They make it possible to quickly identify the most important points and the arguments that support them.Persuasiveness: A well-structured argument is more convincing. The pyramid principle strengthens the overall persuasiveness of communication by organizing supporting points logically. Practical ExampleScenario: A company is considering entering a new market.1. Key Message:Entering the new market is feasible and strategically beneficial.2. Supporting Arguments:Market Potential: The market is large and has a high growth rate.Competitive Landscape: Few strong competitors, with room for differentiation.Financial Profitability: Projected revenues exceed costs, break-even point will be reached within two years.3. Supporting Data and Facts:Market Potential:The market size is estimated at 1 billion dollars with an annual growth rate of 10%.Key customer segments include young professionals and tech-affine consumers.Competitive Landscape:Key competitors have a 60% market share, leaving 40% for new entrants.Our unique value proposition can fill gaps not covered by the competition.Financial Profitability:The initial investment cost is $10 million, with projected annual sales of $15 million.The break-even analysis shows profitability within two years with a positive Net Present Value (NPV).By structuring the information according to the Pyramid Principle, you can present the interviewer with clear, logical and convincing arguments for market entry, ensuring that listeners quickly grasp the main message and supporting details. Key Takeaways - How to Communicate EffectivelyStructure the case conclusion recipient-friendly by applying the Pyramid Principle.Start with the main message, organize supporting points into logical groups and ensure a smooth flow of information, which increases the effectiveness of business communication.You are looking for a case to practice the pyramid principle with?

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2x2 Matrices and the BCG Matrix

You'll find the 2x2 matrix to be a valuable tool for evaluating ideas, guiding you to the ideas that deserve more in-depth exploration. It simplifies decision-making by organizing and ranking ideas based on factors like importance and growth potential.Especially in the early stages of brainstorming business models, this method accelerates decision-making, ensuring quick and effective choices. It's widely favored in the consulting industry due to its ability to present options in a mutually exclusive, collectively exhaustive (MECE) manner, offering a comprehensive view of strategic possibilities.If you take a closer look, you will see that there are four quadrants, each representing unique strategic measures. This structure enables you to assess options against two distinct decision criteria. But remember, selecting these criteria thoughtfully is essential for meaningful analysis. Use a 2x2 Matrix in Your Case Interviews as a Visual Summary of Your FindingsIf it fits the situation, using a matrix in your case interview can be a great way to demonstrate clear, structured thinking. It helps break down complex problems and present them in a simple, logical way. Let’s Take a Look at an Example for a 2x2 Matrix:In order to make an investment decision, we need to analyze the potential business areas in which we should continue to invest.Two key factors play a crucial role here: importance to the company, measured by the business area's share of total sales, and expected performance, particularly projected growth. These insights give a clear picture of long-term profitability and strategic value, helping you make better decisions. Now you can place the business areas in the individual quadrants of the matrix, then look at the position of each business unit in the matrix and derive decisions from this:Divest: Check whether it makes sense to withdraw resources from business areas in the "Divest" quadrant and invest them in areas with higher potential. Divesting is most likely the best option for business areas with low importance for the company and a low expected performance.Improve Now: Business units with a high importance for the company, but low expected performance, should be improved as soon as possible. Identify measures to strengthen their strategic importance.Scale back: Business areas with high growth potential, which indicates that the market as a whole is expanding and that there are opportunities for growth. However, they currently only have a small market share, which means that they are not the dominant players in the market and may have to fight against strong competition.It could be considered to reduce their activities or resources. This allows the company to deploy resources more efficiently and focus on business areas with higher potential.Invest: Prioritize investments in business units in the "Invest" quadrant to maximize their growth potential. This applies for business units with a high importance to the company and high expected performance.By using this matrix, you can systematically structure investment decisions and ensure that your resources are deployed where they will add the most value to the business. But keep in mind that business unit performance should be monitored regularly, and the investment strategy should be adjusted to ensure that it continues to meet business needs. The Most Important Facts About the General 2x2 Matrix:➡ A 2x2 matrix is a visual representation organizing information into four quadrants based on two decision criteria.➡ 2x2 Matrices facilitate quick prioritization of options by categorizing them into dimensions such as "important/not important" and "high/low growth potential."➡In consulting contexts, the 2x2 matrix is commonly employed to offer a clear overview of strategic options and make structured decisions on complex matters. The Best-Known 2x2 Matrix is the Growth-Share Matrix (BCG Matrix)The growth share matrix, also known as the BCG matrix, is perhaps the best-known example of a two-by-two matrix.It helps you evaluate your company's product portfolio by considering factors like the product life cycle and experience curve. Since these can be hard to measure directly, market growth and relative market share serve as useful proxies. By mapping your products on the matrix using these indicators, you can make smarter decisions about where to invest or when to divest. Poor Dogs:These are products or businesses with a low market share in a slow-growing market. Poor dogs usually generate little or no profit and often require significant investment to rescue or revitalize them. If this is not successful, it may be advisable to divest them.Question Marks:These are products or business areas with a low market share in a fast-growing market. Question marks often require considerable investment to increase their market share and become stars, but there is also a risk that they will not develop successfully and become "poor dogs", i.e. unprofitable products or business areas.Cash Cows:This refers to products or business units that have a high market share in a slow-growing market. Cash cows usually generate a high cash flow and require relatively little investment to maintain their position. They are often leaders in established markets and have stable profitability.Stars:Stars are products or business areas with a high market share in a fast-growing market. They often require significant investment to fully realize their growth potential, but they also have the potential to become future cash cows. Stars are typically in markets where the growth potential is high but the market share is not yet stabilized. The Most Important Facts About the Growth-Share Matrix (BCG Matrix):➡ The Growth-Share Matrix assists in determining investment or divestment strategies.➡ Ideally, a product progresses from a question mark to a star and eventually to a cash cow.➡ Note: This framework is referred to as the BCG matrix specifically when interviewing with BCG; otherwise, it's known as the growth-share matrix. However, please do not say "I am now using the BCG Matrix" during a BCG interview. Analyze Revenue Growth Options for a Company Using the Ansoff MatrixAlongside the BCG matrix, the Ansoff matrix is among the most familiar two-by-two matrices. Created by mathematician and economist Igor Ansoff in 1957, it's employed for choosing appropriate growth strategies in entrepreneurship. This matrix outlines four clear strategic options: Market Penetration, Market Development, Product Development and Diversification. Market Penetration:In a market penetration strategy, the company focuses on selling more of its existing products or services to its existing customers. The aim is to increase market share by either acquiring more customers or selling more to existing customers. This can be done through price reductions, promotions, improving customer service or introducing new sales channels.Market Development:When the focus is on the market development strategy, the company expands by extending its existing products or services to new markets. This could mean geographical expansion by expanding into new regions or countries, or reaching new customer segments by directing its products or services at new target groups.Product Development:The product development strategy involves the development of new products or services for existing markets. The company uses its existing market knowledge and customer relationships to develop new offerings that better meet the needs of its customers or address new needs.Diversification:In the diversification strategy, the company strives for growth by developing new products or services for new markets. The three diversification strategies include horizontal, concentric and lateral diversification.Horizontal diversification: New products may have nothing to do with the current offering, but could appeal to existing customers.Example: A company that previously only manufactured household appliances like refrigerators and washing machines starts producing consumer electronics such as televisions and speaker systems. These new products are unrelated to the existing household appliances, but may appeal to the same customers who are interested in home electronics.Concentric diversification: New products often complement the current offering and may appeal to new customers.Example: A manufacturer of sportswear expands its product portfolio to include fitness equipment. The new products (fitness equipment) complement the existing offerings (sportswear) and can attract both existing customers and new customers who lead an active lifestyle and want to improve their fitness.Lateral diversification: New products have no relationship or synergy with the current offering.Example: A food manufacturer that has previously only produced snacks ventures into the financial services industry and now offers credit cards. The new products (credit cards) have no relationship or synergy with the current offerings (snacks) but open up entirely new markets and customers. The Most Important Facts About the Ansoff Matrix:➡ The Ansoff Matrix provides insights into how future growth can be achieved.➡ The Ansoff Matrix distinguishes four strategies: market penetration, market development, product development, and diversification.➡ Each strategy in the Ansoff Matrix presents different levels of growth and risk potential. Are You Looking for Cases Where You Can Apply These Matrices?Check out our recommended resources or explore the Case Library for all cases on this topic.

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SWOT Analysis

As you get to know the different consulting tools, the SWOT analysis is one of the most effective ones. This tool helps assess a company's strategic positioning and reveals whether its strategies align with its objectives. By understanding SWOT, you can gain insights into the factors influencing a company's performance. What Is the SWOT Analysis?The SWOT analysis is a strategic tool used to evaluate a company's strengths, weaknesses, opportunities, and threats. This framework helps identify both internal and external factors that affect the company’s success.Strengths are internal factors that provide the company with a competitive advantage, such as a strong brand or innovative technology. In contrast, weaknesses are internal challenges that may hinder the company's performance, like high costs or limited innovation.Opportunities refer to external factors that the company can leverage for growth, such as emerging market trends or new technologies. On the other hand, threats are external challenges that could negatively impact the company, such as increased competition or changing regulations.Let's take a look at the details of each of the four factors in the SWOT analysis and explore some examples. Strengths: What Sets the Company Apart?Every company has certain strengths that give it an advantage over others. These strengths help define what makes a business successful and how it can stay ahead of the competition. Let’s look at some key strengths that can make a real difference:Brand Image/Goodwill: A company’s reputation is one of its most valuable assets. A strong brand builds trust, which not only attracts new customers but also keeps them coming back. This goodwill can be a deciding factor in a crowded market.Financial Resources: A healthy financial position gives a company the flexibility to invest in growth, innovation, and expansion. It also provides a buffer during tough times, allowing the business to continue moving forward when others might struggle.Technology: Companies that embrace the latest technology are often more efficient and can offer better products or services. Whether it's improving internal processes or developing innovative solutions, technology plays a key role in staying competitive.Know-How: Industry experience and expertise give companies a big advantage. Teams that know the ins and outs of their field can make smarter decisions, spot opportunities early, and navigate challenges more effectively than less experienced competitors.Patents and Intellectual Property: Having unique products or protected innovations can be a game-changer. Patents and intellectual property rights not only shield your business from copycats but also give you a clear advantage in the marketplace.Customer Base: A loyal customer base is a major asset. Repeat customers bring steady revenue and can act as brand ambassadors, spreading the word about your business. Satisfied customers are also a sign that you're doing something right, which is essential for long-term success. Weaknesses: Areas for ImprovementWeaknesses are internal factors that may limit a company’s effectiveness. Examples include:Poor Reputation: Negative public perception can drive away potential customers.High Cost Structure: Inefficient operations may lead to reduced profit margins.Lack of Loyalty: Weak customer or employee loyalty can undermine stability.Limited R&D: Insufficient innovation can make it difficult to compete.Restricted Access: Challenges in reaching key distribution channels can hinder growth. Opportunities: Where Can the Company Grow?Opportunities are external factors that a company can leverage to drive future growth. Some examples include:New Technologies: New advancements can create new markets or enhance existing products.Removing Trade Barriers: Easing regulations can facilitate international expansion.Market Expansion: Entering new geographical areas can provide new revenue streams.Consumer Trends: Shifting customer preferences may present chances to innovate. Threats: What Risks Does the Company Face?Threats are outside factors that could have a negative impact on a company’s growth and profits. Some common threats include:Changing Customer Needs: If customer preferences change, products might become outdated.Increased Regulations: New laws could bring extra costs or limits on how the business operates.New Competitors: Easy market entry can lead to more competition.Substitute Products: Alternatives that meet the same needs can take customers away. Making Sense of the SWOT MatrixAfter identifying the factors in each category of your SWOT analysis, the next step is to organize this information into a simple 2x2 matrix.Once you have your matrix set up, you can formulate strategies by asking key questions. First, consider how you can use your strengths to take advantage of opportunities in the market. Next, think about how you can leverage these strengths to avoid potential threats. Additionally, reflect on which opportunities can help you overcome your weaknesses. Finally, identify ways to minimize your weaknesses to better protect against threats. By systematically addressing these questions, you can develop a clear action plan that aligns with your company’s strategic goals.

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Be sure to check out the following articles to expand your knowledge on frameworks:

4C Framework 4P Framework 7S-Framework of McKinsey The Value Chain The PESTEL Analysis for Consulting The Scrum Framework

Step 6 - Case Math

Learn about the most common mathematical requirements in case interviews and how to handle them confidently and efficiently.

Begin with the key articles on case math:

Why Math Matters

Math is more than just a handy skill in consulting — it’s often a game-changer. Whether you're analyzing complex business challenges, building solid recommendations, or backing up your advice with hard data, strong math skills frequently set you apart in this field.

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How to Practice Math Skills

When preparing for a case interview in consulting, you will quickly realize that math is an essential component. Don’t worry, you don’t need to be a math genius – it’s enough to handle numbers in a structured and confident manner. Important Calculations and Computations in Case InterviewsLet's take a look at the types of calculations required and how you can best prepare for them. Typically, math in case interviews is usually tested in the following ways: 1. Basic Arithmetic OperationsThe foundation of any mathematical task is basic arithmetic: addition, subtraction, multiplication, and division. Quick and error-free calculation, either mentally or on paper, is crucial.2. Percentages and FractionsPercentage calculations and working with fractions are often part of case interviews. You should be confident in calculating percentages and converting fractions to decimals and vice versa. This is especially relevant for tasks such as capacity change or profitability analysis.3. Estimation QuestionsEstimation questions test your sense of magnitude and your ability to quickly provide plausible numbers. Practice making rough estimates for various scenarios, such as the size of a market or the number of customers in a store.4. Charts, Data, and TablesIn many interviews, you will be presented with data in the form of charts and tables. Your task is to quickly analyze this data and draw the correct conclusions. Practice recognizing data patterns and filtering out relevant information. Here, you can practice with Numerical Reasoning Drills!5. Word ProblemsWord problems test your ability to understand and solve mathematical problems from a written scenario. It’s important to handle these types of tasks confidently and quickly. In our Brainteaser Library, you will find many word problems that require mathematical skills. Solve them now!

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ROI and ROAS

When preparing for case interviews, ROI and ROAS are two concepts you'll encounter repeatedly. Both are key metrics that enable you to evaluate a company's success and measure the efficiency of investments.🔎 In this article, you’ll learn how to correctly apply ROI and ROAS in your case analyses and how to structure your answers clearly.

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Break-Even Analysis

The break-even analysis helps you find the point at which a company’s total revenue equals its total costs. This analysis allows you to determine the number of product units that need to be sold to reach profitability, given the product’s price and costs.🔎 In this article, we’ll show you how to tackle the break-even analysis in a case interview. Enjoy reading! What is Break-Even Analysis?A break-even analysis is crucial for assessing a company’s profitability. It illustrates the relationship between profit, revenue, and costs, helping to calculate the break-even point (BEP). It's essential to understand the concept of fixed and variable costs.👉 Make sure to check out our article on fixed and variable costs!The formula for calculating the break-even point is:When fixed costs are greater than zero, it’s critical to have a positive contribution margin per unit (i.e., the price must be higher than variable costs) to reach a break-even point.

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CAGR - Compound Annual Growth Rate

The Compound Annual Growth Rate (CAGR) is an essential metric for consultants, especially when comparing long-term growth scenarios. It represents the average annual rate at which a value (such as a business’s revenue or an investment’s value) grows over a certain period. For consultants, understanding and utilizing CAGR is crucial when projecting future business performance or comparing investments.

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Be sure to check out the following articles to expand your knowledge on case math:

Fast Math Cost-Benefit Analysis Fixed & Variable Costs Opportunity Costs Net Present Value - NPV Balance Sheet Supply and Demand

Management Theory & Concepts

Discover practical tools for business analysis and common business terms, and learn how to apply them confidently to make informed decisions.

Useful Business Analysis Tools

Our collection of business analysis tools contains the most important frameworks for case analysis. Learn more in our Case Interview Basics.

ABC Analysis Pareto Principle Product Life Cycle Benchmarking Core Competencies The 5 Cs of Credit The Business Model Canvas The Balanced Scorecard The Cynefin Framework Kotter Change Management Model The Capability Maturity Model (CMM) The Competing Values Framework SMART Goals in Consulting Public Value Strategic Triangle GROW Model Hoshin Kanri Matrix The Stacey Matrix The Influence Model ADKAR Model McKinsey Growth Pyramid Qualitative and Quantitative Analysis Correlation and Causality

Common Terms of Business

Learn everything you need to know about the common terms of business in your case interview. Our Case Interview Basics prepare you to crack the case.

Economy of Scale and Economy of Scope The Tuckman Model The Kanban Framework The Blue Ocean Strategy Lean Management Servant Leadership Peter Principle Emotional Intelligence Information Technology Infrastructure Library (ITIL) DevOps Five Dysfunctions of a Team Kolb's Learning Circle Interpersonal Communication Six Sigma The Role of the Hypothesis in Consulting The Roots and Effects of Inflation Learning Organization Theory of Planned Behavior Situational Leadership Theory of Constraints Herzbergs 2-Factor Theory Income Statement Cash Flow Statement Design Thinking Capability-Based Planning Unique Value Proposition (UVP)

Next Step: Practice With Peers

The best preparation is practice. The more interview situations you’ve trained for, the more confident you’ll be in the real thing. Once you’ve mastered the basics, do mock interviews with other candidates and solve cases together – this helps you apply your knowledge realistically and gain confidence.

Not sure what to expect in mock interviews? Here are some helpful resources.

Meeting Guide: How Do Mock Interviews Work on PrepLounge?

Read this article to learn how to make the most of mock interviews.

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Example Meeting

Check out the example meeting to see how a mock interview works on PrepLounge.

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