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Knowing which steps to take in case quant

Anonymous C asked on May 15, 2018 - 3 answers

Hello Expert

I find it tough to work out what are the future steps to take in the case quant section?

The problem may ask for the future market size in 3 years and how many units needed to achieve 50% overall.

I find this hard to lay out upfront for the interviewer, but rather i tend to go step 1, step 2 etc, figuring it out as i go.

Any tips to build this more structured way of dealing with the quant?

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replied on May 15, 2018
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I am not completely sure whether you are talking about the general calculations or a market sizing quant problem.

If it is the general math, you follow these steps:

  1. Take a minute to think about the problem
  2. Provide the formula / your approach to calculations / equation
  3. Check with the interviewer whether it's correct
  4. Continue calculations, coming back to the interviewer with some intermediate numbers
  5. Come up with a final number and check it with the interviewer.

If it is a market sizing problem, there are several things you should know:

1) First of all, there are two ways to calculate market size:

  • From supply side (e.g. vending machines spots)
  • From demand side (e.g. vending products consumption)

2) There are 2 ways to structure market sizing:

  • Formula - basically a math formula to come up with a solution. The problem with the formula is that it is easy to forget something or get lost.
  • Tree - same as with regular cases you build a tree. A very simple example: you need to calculate the number of dogs on manhattan. A number of dogs = share of households having a dog * # of households. # of households = population / average household size. In the end, you'll have a pyramid where you have to fill the numbers on the base of the pyramid. This approach is much easier and help you track all the numbers

3) You should use the key market sizing techniques:

  • Making assumptions based on personal experiences (Use the example of your house where out of 100 apt-s 10 have dogs)
  • Adjusting numbers (NY is a busy city thus fewer people have dogs)
  • Sanity check - try to apply your calculations to real environment
  • etc.

4) You should learn and use the key tools:

  • Using age even age split (suppose life expectancy is 80 years. Assuming even age split we have 4 mln people in US of each age group)
  • Using 80/20 split (suppose 20% people earn 80% wealth and the average salary is xx...)
  • Using approximations (Length of NY-SF flight and plane speed to calculate US length)
  • etc.

5) Learn and use the key numbers: populations, gas price, gas consumption, Boeing speed and nmber of seats, average salary, # of gates in the airport, GDP growth rate, inflation, etc.

Good Luck!

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updated his answer on May 15, 2018
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Hi Anonymous,

these are the steps I would suggest to be able to correctly structure a market sizing upfront:

  • Learn the 4 key market-sizing frameworks. Facing a market sizing case without structure is like facing a business case without it – it becomes almost impossible to solve it. At the bare minimum, the interviewer will feel you are unstructured. For further information on market sizing structures, please feel free to look at my profile or just send me private message.
  • Take one minute of time to structure your thoughts. Many candidates think about market sizing as something different from a case – in the sense that it is not compulsory to take time to structure. That’s not the correct approach, since you should always take time at the beginning to structure. If you don’t take time upfront and immediately present a structure, even if your structure is correct, the interviewer will (i) think you have already done such case and (ii) wonder if you are able to correctly structure cases you are not familiar with. While if your structure is wrong, he/she will just think you are too impulsive.
  • First lay down the structure, then start using numbers. Numbers are the last step in the process – your overall structure is always the priority. Before using numbers, you should also align with the interviewer on the fact that the structure is fine.



replied on May 15, 2018
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Hi Anonymous,

firstly, you should be aware that it is okay to take a moment in order to lay out the calculation steps. Just let the interviewer know that you are first taking a moment to outline the necessary calculatory steps, then sharing and aligning these steps with him, and finally executing the calculation (while taking the interviewer along).

This is a crucial skill that consulting interviewers look for in a candidate, becaus guess what - this is exactly how you need to walk clients through your thinking on a day to day basis.

Cheers, Sidi

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