industry knowledge for case studies

You are doing a lot of what I say "looking at the leaves" while you need to rise above and look at the whole forest. You cannot, ever, know about all the industries you may be questions on at a case interview. Your job is NOT to know everything about everything but to have the TOOLS to get you there ASAP. What does that mean? Your brain freezes because you've trained it to only answer things that you ALREADY know. You now need to train it to figure out what are the RIGHT questions to ask to get you to a place where you can accurately GUESS at what you don't know. Take your own Q: "what influences variable costs of power plants". I've never read a single document/article on power plants. Here's how I'd approach it.

1. Do I know what variable costs are? Yes. OK, next:

2. Do I know what generally happens to get me power@home? Yes (coal/hydro/solar --> magic happens --> electricity --> national grid --> power lines --> regional grid --> more power lines --> .... -> home). OK, next:

3. Do I know what happens in ANY generic plant/factory? Yes (source --> raw material --> lots of magic --> finished material --> destination). OK, next:

4. Do I know, approx, what the "magic" is? Yes (material, machines, people, etc). OK, next:

Now, TUNE the above to "power plants". Thinking through this, the variable costs are likely going to be:

1. Raw material (if there's no demand, you don't supply == no raw material costs)
2. Transport (see above -- things like people, fuel, etc)
3. Seasonal labor, if applicable (likely -- summers in hot country == more AC; winters in cold countries == more heaters), so more people to dig coal, or transport, etc etc..

That's all I can think of without knowing ins and outs of the industry. You can probably rattle these off without knowing ANYthing about ANY industry and you'll likely be right but your goal is to show you aren't just guessing and have thought through and customized your answer to the industry in question.

So, fun fact: After writing all that above, I just googled up "variable costs of power plants" and came up with this link: https://www.e-education.psu.edu/eme801/node/530 and you'll note, I was almost 100% right. And THAT's how you crack a case interview. Good luck!

Hemant

Hi,

I strongly recommend learning more about different industries. It will help you to:

• Build better structures
• Demonstrate business judgment
• Answer the questions on creativity

Focus on the most common industries in the following priority (sorted by probability of getting a case): 1-retail and CPG; 2-airlines; 3-Telecom; 4-banking; 5-natural resources; 6-tech and work on building analytical thinking in each of these industries.

There are several sources of info to develop analytical thinking:

1) Cases - you simply solve 50-70 cases and get a broad knowledge of different industries, common pitfalls and questions. The key here - find good partners who already had case interviews with MBB companies

2) Company reports, equity reports, IB roadshow docs - usually have a good overview of company and industries. The most useful sources to understand what's going on with the companies

3) HBS cases - quite useful, but not sure if lot's of them available publically. Probably worth buying

4) Books - one good book about airlines with numbers and industry analysis can give you all needed industry knowledge

5) News, Industry blogs

For each industry, you should understand:

• Revenue streams
• Cost structure
• Margins
• Key performance indicators
• Key revenue drivers
• Industry trends

I strongly recommend practice drawing structures for each industry - profitability, value chain, etc

Also some comments about particular industries:

1) Retail - make sure you understand key retail metrics (P&L lines, same store sales, revenue per square meter and per person, etc) and how distribution works as well as its metrics (share on shelf, etc)

2) Airlines - read about profitability issues, different routing models, cost structure, industry metric s like load factor and make sure you know all possible additional revenue streams

3) Telecom - I would read industry reports and try to understanf how telecom is transforming with internet penetration and tech innovations

4) Banking - you should know the key products in corporate and retail banking and how they earn money (Interest, commision, transactional)

5) PE / M&A - go through available case examples and read about different PE strategies

Then I will switch to getting the functional knowledge and key concepts in:

• Marketing (Brand and trade marketing tools, etc)
• Supply chain (Ops metrics like cycle time and throughput time, distribution and delivery specifics, etc)
• Finance (Basic Accounting and Valuation)

Good Luck

Hi Alex,

I completely agree with you that the importance of sector knowledge is underestimated in case interviews. While most people would argue it is not as relevant, trust me it makes a difference. Just to give you an idea, I had a very hard time in one of the real life case interviews, simply because I wasn't familiar with the revenue streams of private banking.

I would advise to get familiar with some most common aspects of sectors e.g. revenue streams, main products, consumer behaviour, logistics and key trends. The most common sectors covered in interviews are banking, insurance, consumer goods, energy and TMT.

As mentioned by other experts, you can find some information in certain case books or via a simple google search.

Best of luck!

Hey Maximilian,

As an introductory tip/suggestion, I wouldn't try to memorize too many things about industries for two reasons: first, even if you try to memorize about what do you think covers all of the possible industries in the world, chances are that the interview can come up with a case even in a new industry that you didn't consider; second, you're expected to be able to apply critical reasoning and creativity skills, not to known deep facts about industries.

That said, if you really want to know more about (at least the most typical) industries, I would recommend you to read a consulting case book from one of the best business schools in the world. Most of them have a section on key trends and topics in most common industries. Send me a PM if you can't find any of these online, and I can share with you just the industry pages for a selected one.

Best

Bruno

I believe the answers to this question will address yours:

https://www.preplounge.com/en/consulting-forum/how-can-i-efficiently-learn-the-basics-about-as-many-industries-as-possible-1522

Andrea

Dear Alex,

Good point.

Some casebooks address this - Kellog and Wharton for example - they have industry trends, drivers and so on.

If you're not able to find it just PM me and I will send you.

Cheers

Hi Alex,

I actually disagree with Heman a little bit here because I prepare my students on different industries. We discuss ideas and market trends for Banking, Products, Technology etc. and it helps when you bounce ideas, debate - you start to understand how you structure your thinking process.

The first step is read up a few bits about industries - I recommend Economist for general market overview. Wired and Tech crunch for new technologies out there, sometimes FT for market insights.

Prior to interviews - easiest way is obviously getting a coach to bounce ideas and discuss in prep or find a friend that works in industry that you can debate trends with.

It is true that with experience this knowledge is almost automatic but you can definitely prepare also and it doesn't hurt to have an idea about market trends for Pharma, Banks, Tech firms etc.

Hope this helps!