McKinsey / Accenture / Got all BIG3 offers / More than 300 real MBB cases / Harvard Business School
Book a coaching

If you do a profitability case and decide on a hypothesis "Revenue problem", should your issue tree only consist of the revenue side of profitability? And if it is not a revenue problem, then you change your hypothesis to "Cost problem" and draw a completely new issue tree? Or should the issue tree include both revenue and cost from the beginning?

Kristian asked on Aug 24, 2018 - 2 answers
  • Upvotes
  • Date ascending
  • Date descending
Vlad replied on Aug 24, 2018
McKinsey / Accenture / Got all BIG3 offers / More than 300 real MBB cases / Harvard Business School

Hi,

The short answer - it should have both revenues and costs. What you are saying is not a hypothesis.

The major mistake of the candidates is that they start using the hypothesis and neglect having a proper structure.

Moreover, if you perfectly solve the case without ever stating a hypothesis - you'll pass the interview. So most probably you had some other issues with the case as well and they used it as a standard feedback.

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 a number of the hypotheses - 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!

Egor
Expert
replied on Aug 24, 2018
McKinsey/Actionable feedback/Harvard University/Warwick Business School

That’s a good and important question. I am glad you asked.

The case consists of several stages, first of them are:

  1. Know-how: when you ask questions relating to the problem at the beginning
  2. Structuring: take time to structure your approach/structure in the moment and then tell your approach to the interviewer.

During structuring phase, you should do the followng:

  1. Give overview of all your branches with the deep-dives in each
  2. Tell interviewer that you have a hypothesis relating to e.g Revenue/costs with specific reasoning: why you want to look at it. And then ask him whether we should deep-dive in it.

Interviewers will alwasys tell you, as in consultancy we do not have a lot of time boiling the ocean. And in case interview you only have 30 minutes.

We should prioritize the branches and analysis to solve the problem as efficient and fast as we can.

Related BootCamp article(s)

MECE Principle

The MECE principle is a way of segmenting information into sub-elements that are mutually exclusive and collectively exhaustive. Learn more in our bootcamp.

4 Comment(s)

Approaching a Case

In order to get into consulting, the case study is the most important element of the interview. Here, you can learn the specific skills and concepts to solve them.

19 Comment(s)

Focusing on The Core: Mock Interviews

It is to practice as many cases as possible - both as interviewee and as interviewee. Here are a couple of guidelines to help you get started

3 Comment(s)

Case Studies

The case study is the most important element of the case interview, which you'll have to nail in order to get into strategic consulting. Here you can learn the specific skills and concepts necessary to solve them.

4 Comment(s)

Profitability Case

Learn to crack Profitability Framework Consulting Cases, which are the number 1 reason for real consulting projects and hence are an important case type.

8 Comment(s)

Related case(s)

DHL Consulting case: Bike Shop

Solved 36.1k times
4.3 5 10624
| Rating: (4.3 / 5.0)

You have been hired to support the owner of a bike-shop as a business consultant. The bike-shop has suffered a significant revenue decline during the last year, and now the owner would like you to assess the situation and options for the way forward. They want to know last year’s profit, i.e. how i ... Open whole case

Oliver Wyman case: Setting up a Wine Cellar

Solved 30.4k times
4.3 5 3248
| Rating: (4.3 / 5.0)

I’m thinking about setting up a wine cellar in my basement. The way I see it, shelf space would be divided into two sections: (1) a “drinking” section where I store bottles for my own consumption and (2) an “investment” section where I store bottles that I intend to sell at a profit after they appre ... Open whole case

zeb case: Private Bank Anytown

Solved 17.9k times
3.9 5 4952
| Rating: (3.9 / 5.0)

Private Bank Anytown disposes total assets of approx. EUR 3 bn on December 31, 2014. The growth strategy of the institution determined at the end of 2010, however, has a higher impact on the cost side than on the income side. Aggregated to the return on equity as defined central parameter of the ba ... Open whole case

Bank envelope

Solved 40.9k times
4.4 5 1539
| Rating: (4.4 / 5.0) |

Your client, Customlope, is the leader in the US secure envelope manufacturing industry. Banks buy these envelopes for operations such as money deposits and high value transactions. Next year, a new digital technology will reduce the overall number of units sold in the industry by 25%. In the shor ... Open whole case

Madflix.com

Solved 40.0k times
4.4 5 1912
| Rating: (4.4 / 5.0)

Our client is madflix.com, a website similar to Netflix. The biggest difference is however that Madflix targets mainly men and provides a majority of “mad movies”, such as action, horror or science-fiction movies. Clients sign up online, order online, receive the movie and mail it back. Madflix is ... Open whole case