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How explicitly do you need to state your hypothesis in McK cases?

hypothesis
Recent activity on Apr 05, 2018
1 Answer
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Anonymous A asked on Apr 05, 2018

Hello,

could you suggest how explicitly the hypothesis needs to be stated in a mck interview in the first question?

1) When the case is e.g. about acquisition, is it good to say “in order to confirm that the client should acquire the company I would want to confirm that the market is attractive, the company is profitable, ...”? Or should it be rather “my hypothesis is that the client should acquire this company and I will test it by checking that the market is attractive, the company is profitable, ...”?

2) Similar question regarding a profitability case. At the beginning in a mck case you don’t often have enough info regarding what caused the profit to drop. Do you say what criteria you would consider that could drive the profit down? Do you then state a hypothesis after the second question when you have more details or when?

3) there are cases where the first question is more like brainstorming, eg. “What reasons you could think of that drove revenue decline”. Do you then just brainstorm the drivers and bucket them, present to the interviewer and say which one is the most likely driver and why and is that good enough as hypothesis?

Thanks a lot

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Best answer
Vlad
Expert
replied on Apr 05, 2018
McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School

Hi,

First of all - it's not mandatorily required. I would say - use the hypothesis if you are really good at solving the cases. If not - use the basic approach

There are two ways to use the hypothesis:

First - presenting a structure using the hypothesis. For example, if you are having a PE (private equity) case, you should do the following:

1) Make classic structure (market, company, competitors, feasibility of exit)

2) Make subpoints (e.g. in market: size, growth rates, profitability, segmentation, etc)

3) Present your 1st level Hypothesis:

  • - "In order to understand whether we should invest in Company A, I would like to check that the Market is Attractive, the Company is Attractive, the competition is favorable and we have good opportunities for of exit"

4) Present the main 2nd level Hypothesis:

  • "In the market, I would like to make sure that the market is big enough and growing;
  • In the company I would like to find additional opportunities for growth;
  • In competition I would like to check that the market is fragmented enough;
  • Finally, I would like to check if we have potential buyers and can achieve desired exit multiples"

Another way to use hypothesis is using the hypothesis to prioritize your analysis:

1) Make a structure: "Problem in sales may be related to Sales Motivation, Sales Strategy, Sales Coverage, and Sales Process:

2) Prioritize a part of the structure based on your knowledge / common sense / available data: "Taking into account that motivation is the core problem of the sales organization, I would like to prioritize this part of the analysis"

Good luck!

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