While we covered aspects of the consulting industry in Part 1, in Part 2, we will discuss about what it takes to join a consulting firm.
Consulting firms are loosely categorized into strategy consulting firms and management consulting firms. Strategy consulting firms are those that work on advising clients on strategic shifts in either the corporate structure or the business verticals. These are firms like McKinsey, BCG, Bain, AT Kearney, etc.
Management consulting firms are the ones that work on strategy-building as well as on the implementation of the strategy (either proposed by them or by others). These are firms like the Big 4: EY, PwC, KPMG, and Deloitte among others.
Despite the type of consulting firms, the method of shortlisting aspirants is similar. Although the popularity of these firms varies, the strategy consulting firms do find the crème de la crème of the B-schools aspiring for their entry-level positions. The shortlisting criteria are as follows:
- The strength of a candidate’s academic background and their performance, prior to joining and in the business school
- The academic and gender diversity of the candidate
- A candidate’s prior work experience, if any, and the projects they have worked on
- A candidate’s extracurricular activities, such as sports/event organization, involvement in institute committees/NGOs, etc.
Once you are shortlisted for an interview with the firm, the next step is, which matters the most, cracking the interview.
So, What Are the Purpose and Components of a Consulting Interview?
The consulting interview is an exercise in judging if you are ready to represent the firm in front of a client. That means the candidate must be sharp and be able to engage the client in a meaningful conversation. The first impression that you make here is crucial.
The interview consists of case studies, which judge both your problem-solving ability and your ability to communicate effectively with the interviewer while making logical inferences on the basis of the information presented and following a structured approach to arrive at a conclusion to the case.
Hence, there are two things to work on when preparing for a consulting interview:
- Practicing various types of case studies
- Preparing to become an effective communicator
What Is a Case Study?
A case study is a methodology for in-depth investigation of an individual, a group, or an event. Case study is made up of two independent words—case and study. A case is a scenario or a business problem that needs to be solved. Study is the act of investigating the facts around the case and deriving conclusions to understand and mitigate the business problem.
The problem statement of the case defines its scope and you need to avoid biases or external information while solving a Case. Let’s say that the interviewer in the case mentions that the population of India is 100 million. Even if that may not be true, as it isn’t, that is the fact that needs to be used during the case. The interviewer would be judging you on your ability to comprehend the data presented.
Case study method provides a systematic way of:
- Looking at events
- Collecting data
- Analyzing information
- Providing conclusions
A case study may belong to various domains, such as Business Ethics, Organizational Behavior, Strategy, Operations, Marketing, Human Resources, Finance, etc. In general, any case study is a combination of multiple disciplines.
What Are the Different Types of Case Studies?
While there are different types of cases that interviewers assess a candidate on, they can be broadly categorized under the four most common types:
Most of the cases that are asked by the interviewers might be a simplified version of the case that they have worked on in real life.
How Do I Solve Case Studies?
Every case study is unique. Analyzing a case, however, requires a structured approach which can be applied to the situation presented while not being too rigid. Here, we shall discuss one such approach and then work on a case using it.
- Identifying the Problem: The material in the case study is much like the daily conversations. In a conversation, we usually choose a topic and then discuss that topic. Now, the problem we face is that there is a lot of information. The idea is to figure out and organize the useful information valuable for assessing the core problem.
- Defining the Problem Statement: We know that the first step is to identify the problem. However, like any disease has symptoms, problems too have effects. Often, we confuse problems with their effects. To identify a problem, “why?” must be asked. When we cannot derive any further meaningful response to this question, we probably have arrived at our problem. The problem statement should be terse.
- Identify the Stakeholders: Once we arrive at the problem, we can figure out who all are affected by the problem. They are the stakeholders. The information available is always in bits and pieces. One needs to fill in the gap. Thus, one needs to make certain assumptions, while evaluating, to make a decision. The assumptions should be fairly reasonable.
- Current Situation Analysis: We, then, need to take all the information we have obtained and arrive at an understanding of the current situation. For this, we may employ various frameworks from among these: SWOT, Profit/Revenue/Cost, 4Cs, 4Ps, PESTLE, BCG Matrix, Porter’s Five Forces, and Demand–Supply Curve. We shall briefly discuss these frameworks in this article.
- Analyzing and Evaluating the Options: Upon taking stalk of the current situation, the next step is to identify the various options available to solve the problem at hand. One needs to come up with different alternatives for implementation. For instance, one must understand that status quo in itself is an alternative. It is not avoiding decision-making. Perhaps, it is a conscious decision that with certain modifications, status quo is the best course of action under the given circumstances. Besides this, one must try and come up with more creative thinking and suggest other alternatives.
- Deciding on an Action Plan: Once you come up with all possible alternatives, to choose the best possible alternative, one must have a set of criteria. For instance, criteria could be how cost and revenue models are affected, how consistent is the alternative, whether important targets are achieved, etc. The final alternative will be the one that fulfils most of the criteria.
- Contingency Plan: We should always have a Plan B. In case the strategy adopted by us does not pan out, we should have a fall-back approach to achieve the objectives.
What Are Some of the Frameworks That Were Discussed Earlier?
In this section, we shall discuss a few frameworks that are commonly used in consulting interviews to solve case studies.
Framework 1: SWOT Analysis
This is an analysis in 2×2 format where we evaluate the firm’s four different factors—Strengths, Weaknesses, Opportunities (for growth), and Threats (from probable competitors). While Strengths and Weaknesses analyse the current situation, Opportunities and Threats are forward-looking evaluation metrics.
Let’s evaluate Reliance Jio using this framework.
Framework 2: Profit = Revenue – Cost
This is a framework where the profits of the firm might be affected and you shall be asked to find the reason. Break the problem into analysis of Revenue and Cost in the following ways:
- Revenue = Units sold x per-unit price
- Cost = Fixed cost + Variable cost
- Drill down under each revenue and cost details to investigate further
Let’s analyze a neighbourhood grocery store.
Framework 3: 4Cs
The 4C framework is an important framework to assess the company’s position, its competitors’ position, and factors affecting customer engagement. You use this framework to assess current situation or future threat to a company.
- Company: The company’s current strategies and strengths
- Customer: Who are the customers? What are their inherent demands?
- Competition: Who is the competition? How to thwart any action from them?
- Cost: What are the costs of procuring and selling the offering?
Let’s analyze Flipkart along these lines.
Framework 4: 4Ps
This is a framework that you use to assess the product placement strategy (for a new product) in the market. The four different evaluation parameters are:
- Product: What product design to launch that should be market-fit?
- Price: How should it be priced? Relative to competition or cost-plus basis?
- Place: Where should you sell—offline channels, online channels, or a combination of both?
- Promotion: What mix of promotions should you use? What should be the communication strategy for each channel? Who is the target?
Let’s analyze Bitcoin using the framework.
Framework 5: Porter’s Five Forces
Analyzing the market dynamics on the following five parameters:
- Competition within existing players in the market
- Threat of new players from entering the market and disrupting the dynamics
- Threats of substitutes shrinking the current market size
- Bargaining powers of suppliers which could affect the output price or supply
- Bargaining power of buyers, thereby affecting the pricing and, in turn, profitability
For reference, let’s apply this framework to Netflix India’s OTT service.
Framework 6: BCG Matrix
This, as the name suggests, is a framework which was designed by the consulting firm BCG. The 2×2 matrix assesses the importance of various business within the portfolio of the company and how to prioritize each. An analysis of ITC Ltd. showcases how we can use the BCG Matrix.
Analysis sourced from Google
Framework 7: PESTLE Model
Here you are asked to analyse an industry/company based on the following parameters:
- Political: Discuss on government influence on industry/company
- Economic: Economic implications of the impact on industry (example: inflation, interest)
- Social: People and customs’ influence on the industry/company
- Technological: Any tech development that might affect the industry/company
- Legal: New legislations that could affect the industry/company
- Environmental: Changes in environment that might affect the industry/company
We have performed an analysis on Donald Trump using the framework.
Framework 8: Demand–Supply Framework
This concerns with shift in Demand and Supply curve, based on which the equilibrium shifts. The following diagram shows a condition where the quantity demanded decreases for the same size if the Demand Curve shifts left.
These frameworks find applications in different kinds of case studies as the situation demands and can be very flexible to suit the needs.
An example case is elaborated here:
Interviewer: Our client, Mobiles4you, is India’s largest mobile seller. They are looking to move into home security devices and need our help to make a decision.
In order to identify and define the problem, the candidate needs to ask clarifying questions.
Candidate: I would take one minute to formulate my thoughts.
Candidate: I have a few clarifying questions to better understand the problem.
Interviewer: Go ahead.
Candidate: Thanks. As I understand, the client wants to move into home security devices. Are these devices something that the client would manufacture?
Interviewer: No they will be sourcing the devices from a third-party manufacturer.
Candidate: What are the different range of devices that the client is planning to sell and are these differentiated devices?
Interviewer: There are two devices—one that costs ₹ 5,000 and another that costs ₹ 10,000. These are not differentiated devices.
Candidate: Who are our competitors? Is the market fragmented?
Interviewer: The market is quite fragmented and no one company dominates. A lot of regional players sell their products in different parts of the country.
Candidate: What is our target market?
Interviewer: What do you think on the basis of the information provided to you?
Candidate: I think we are looking at urban markets and target segment is middle class and upper class.
Interviewer: That is correct.
Candidate: I would like to summarize and define the problem statement. The client is a large mobile seller that is looking to enter a new home security device market. The product is non-differentiated and the client wants to sell them in the urban market. They want to know the market size.
Interviewer: That’s right.
Candidate: I’ll take a minute to gather my thoughts and come up with the structure to approach the solution.
Interviewer: Sure, go ahead.
The candidate has identified and defined the problem. They have also pinpointed the stakeholders involved. Now they have asked for some time to do the current situation analysis—herein to get the market size.
Candidate: India’s population is 1.3 billion and assuming 30% of the population stays in urban areas, it means 390 million could be our potential target. Of these, only people in Tier 1 and top Tier 2 cities would be mostly looking for such home security devices. Assuming 30% of the urban population stays in such locations, the size is now down to ~120 million.
Interviewer: Correct, carry on.
Candidate: Now with this 120 million, we can break down the population into four segments: Lower class (40%)—48 million, lower middle class (25%)—30 million, upper middle class (25%)—30 million, and upper class (10%)—12 million.
Candidate: The lower class can’t afford a home security device and the upper class would either have more expensive security devices or have other security arrangements. Therefore, our focus should be on the middle class. We have two products—one priced at ₹ 5,000 which would be more attractive to the lower middle class while the one priced at ₹ 10,000 would be more attractive for the upper middle class.
Interviewer: Carry on.
Candidate: Out of the 30 million lower middle class, 80% (~24 million) of them would be staying in rented accommodations with minimal security while 20% will own their house (~6 million). Out of the 80%, we can make an assumption that 50% (~12 million) would be able to afford a home security device while the rest would either not or will not want it. For 20%, a majority ~80% (~5 million) would need some kind of home security. Adding up, this becomes 17 million possible home security devices priced at ₹ 5,000 that we can sell. Then the market for this product is ₹ 85 billion.
Interviewer: What about the other part?
Candidate: Coming to the upper middle class, we have 25% of the people in this category. Seventy percent (~21 million) of the people here would be owning their homes in gated societies and would not need any kind of home security device. For the rest 30% (~9 million), they would have their own homes or living in rented single apartments and would need some sort of security for their home. Assuming 80% of these people go for the product, we have a target market size of 7.2 million people which translates to market value of ₹ 72 billion. Hence, total market size is ₹ 157 billion.
Interviewer: The client finds the market size big enough to enter. What are the three things that you would tell them to do as part of their market entry strategy?
Candidate: I would like to take a minute to think about this.
Now the candidate would be thinking about various alternatives and coming up with the three recommendations for the market entry.
Candidate: There are three things that I would suggest the company to do. Firstly, use their existing distribution outlets and leverage their brand to earn the customer’s trust. Secondly, gain market share by providing discounts by bundling mobiles and home security devices. Thirdly, incentivize regional retailers to carry client’s products over other competitors’ products.
Interviewer: That sounds good. Thanks.
In conclusion, consulting can be a very rewarding profession that allows you to be on the cutting edge of advancement in any industry but requires one to be ready to be at their best problem-solving self—day in, day out—while being able to communicate their ideas and thoughts effectively.
Nitin Chandak is a graduate from the Indian Institute of Management Calcutta, where he majored in Finance. He has been a consistent academic performer throughout. Post completion of his MBA, he has worked as an analytics consultant for three years. Prior to his MBA, he worked with Backspace (as Breakspace was then known) where he was instrumental in strengthening the Communications and Education Consulting divisions. Nitin is an ardent Manchester United fan and a chocoholic. He wishes to travel the world.
In the Consulting Decaffeinated module, we work closely with the consulting aspirants on mentoring them on case cracking and also improving their client communication. It is probably the most comprehensive and perhaps one-of-its-kind consulting preparation package available for B-school students.