Consulting case interview demonstration and commentary - Growth strategy

hi welcome to consulting confidante live case demonstration I'm Shawn glass from the CEO of consulting confidante and I'm here with Dave MA well you guys alright so we are gonna do a live case so and then give some commentary throughout so let's do it are you ready I am ready let's do it the year is 1930 your client how panca is the leader of an organized crime group in Chicago his organization currently participates in multiple industries alcohol bootlegging gambling loan-sharking and ice-cream parlors overall sales growth has remained constant at 20% per year and mr. Ponca wants to accelerate it to over 50% over the next year he's hired you to figure out how to accelerate his growth all right yeah so after you hear the case prompt that's a really great time where you want to summarize what you just heard to make sure that you understood it correctly and you're not missing anything and just a reiterate you definitely want to summarize you don't want to repeat the case prompt back verbatim yeah so one of the biggest mistakes that I see with students doing this is that they hear the prompt and then they write down their notes and then they read the prompt back to me you know I have the prompt I know exactly what it says you don't have to do that just think of something original pick your own words but definitely don't repeat it back yeah and it looks like we have a pretty diversified set of industries that we play in illegal alcohol illegal gambling illegal loans and legal ice cream and looks like we're pretty good at what we do 20% kegger and we're looking to accelerate to 50% right so to me this sounds like a classic growth strategy case just classic 1930s classic as a matter of fact and so I'd like to explore how to do that and so can I take a minute to think about ways to expand house portfolio and essentially grow our grow our revenue that'd be fantastic yeah so for those of you following on at home I think it's a great time for you to just create a framework pretend you're the interviewee right now and just write it out the exact same way that you would if you were actually doing the case all right so here's the way I'd like to think about our business right so it sounds like we're trying to just grow revenues just make as much money as possible the way that I think about this there's actually a couple different ways we can do it the first is which is grow organically so take our current four lines and just expand them right ways that we could do that potentially increase you know include jacking up the price you know getting our distribution I don't know if we're just in Chicago maybe we thought about Milwaukee a lot of different ways to grow there right another way might be to enter new industries and so there are a lot of illicit things that we can do it sounds like we're not selling drugs yet so drugs could be a way to go and with lastly you know I think acquisition you know in organic growth mergers and mergers and acquisitions that might execute and so you know there's a lot of different things we can do like merge with other famous families take them out and take their business a lot of different things that we can think about right so those are kind of the three areas I'd like to start with Tom from there we can look at you know actual competition kind of examine the market potentially look at different pricing schemes and from there we should be able to come to a conclusion on how to grow our business that sounds great all right so where do we start right I think so typically in a case interview saying the interview we is not going to be asking the interviewer where to start it typically goes the other way around as in those situations what you'll find is that the interviewer will actually ask and say well well what do you think I'd say let's start looking into organic okay organic growth to this and so what I'd love to know then is across our four different business lines if you will how are we doing in each right and so by how are we doing I mean how much money are we making what percent of the portfolio is it capturing you know are we paying a lot more in costs on either any of those types of questions would give me a little bit of an understanding of how we're doing in that business essentially yes so in this case the first chart is often the hardest chart to get and you have a tough time knowing how exactly the charts going to look you'll never guess exactly what it's going to look like there are probably hundreds of ways in which it could be presented and so it's your job as the interview we to ascend we asked some form of the right question to earn this chart the way that I typically think about this is to ask a general slash specific question so in this case general means thinking about how is the business doing and specifically what are a couple questions in which the data could be presented by asking that it's hard for the interviewer to deny you some sort of information that you're asking for that sounds like a great idea so we actually have the revenue by by segment as well as the projected growth for the Chicago market okay so when you receive your chart in a consulting interview sometimes it takes a few seconds to really understand what's going on and you have two options here you can either sit there in silence and process everything or the better option is as you're looking at it you talk through what you're seeing and start making those connections on the fly and as you can see they did a really great job with this looks like we're looking at here on the x-axis revenue by segment so from that what it tells me is that alcohol is by far our biggest in terms of just raw dollars and and it also tells me that the bubble size here that you know it's also the biggest market and that seems to correspond almost perfectly yes and then the projected market growth continues to essentially essentially lines up exactly with that as well right correct and so to me the way that I would read this is that further along the right means that it's better we're better at that right here further up means that it's growing more yeah and the bigger the bubble size it means that the bigger the market is right correct and so to me it sounds like Chicago is a bunch of alcoholics and growing fast we're good at it and it's our biggest and so it sounds like there's a lot that we can potentially capture there and so my first inclination would be to go look at alcohol and see if we can continue to expand it sure because it's going to grow more it's already big and we're good at it so do we have a good sense or a game plan of how we would think about tackling this and is this the right direction that we would want to go strategically within our organization could we even expand and ramp up production for example sure yeah so I think at this point it feels a little bit like fishing or he wasn't exactly sure where to go now as the interviewer I gave a lot of credit for when he explained his framework he had a lot of the hypotheses of where the case was going to go so I pretty much gave him the credit for really understanding where the case could go and then this point where I was a little bit more shaky and less directed I moved it along a little bit I so expanding it out for alcohol production I'd say one area that we've done a lot of research and so you said there's we can just generally grow so extend our production maybe flood the market maybe I don't have a marketing ideas now what else what other drivers might you want to look at especially in alcohol and loan-sharking that we can since we're doing so well we might be able to do and if she mentioned it earlier so as you can see in this point I said you mentioned it earlier and I was very specifically referring to the framework and a lot of times when you're in the middle of the case you're going down a certain path it's really good to take a step back and revisit your framework and say okay what were some of the things that I had mentioned earlier and a lot of times that can reground you and give you the traction you need to get to get back on track um so it sounds like you know I don't have a great sense of how the rest of this industry looks but you know organically we might start there but you know if there are other players in the market I'd love to see what they're doing just use anything that they're doing well and if they're doing something really well and we really like it maybe we could copy it or just take them over all right got it so I'd love to see what the rest of the industry is doing potentially an alcohol that's so I want to point out one small and interesting element to this case that if we look at now if you look at the chart that has Chicago area revenue a lot of times charts will have some additional insights that are a little bit more subtle and difficult to catch so if you look here let's look at particularly loan-sharking on the x-axis you have the revenue by segment for house organizations this is the money that he's making every year now the size of the bubble is actually the size of the entire Chicago market and if you look very close and you can tell that the size of the bubble is about the same as the 10 million dollar legend where he's making ten million dollars so a exceptional response to this chart would have picked up on that and said whoa it looks like his the size of pals organization for this product is actually the same as the entire market and that could give you the insight that he really owns the entire market for Chicago therefore limiting where he can go from there a very interesting point we actually won one chart that not only covers the market size for Chicago for many of these in the news it also covers the market size for some nearby area by and considering okay so alcohol Oh got it so we're looking at the size of business here anything across different markets Chicago even an alcohol pretty small and yeah I mean that makes sense given the size of the city but it looks like there's a lot of other markets here that we could potentially expand into and it looks like for the most part the trends mirror what what we see here threatened so you know the first thought that jumps out on this this one is that you know we're doing well in Chicago there's no reason to think that we could necessarily do well in another market so we could look at expansion in New York you know it seems like a pretty notorious City for this type of business right same thing goes for loan sharking which is big and growing as well probably that's not as big as alcohol but I think any of these potential markets is a potential you know entering in terms of you know probably not in Newark but you know that might just get lumped in with New York yeah but you know to me when I would start with this saying if we're just based in Chicago right now yeah let's look at what it would take to be in New York right right absolutely I think I think it's pretty pretty spot-on so you know if you were thinking about what you'd want to look at in order to decide which city would be the best what are some issues you might want to consider now one of the most common questions that we get a consulting confidante is how do I take my case performance to the next level how do I go from good to great and and what does that even mean and how do I know the difference now if we look at this charted days performance a good performance he understands where the case is going he starts talking about the so what so what's missing the part that's missing is he doesn't really hypothesize around how is he going to make the decision between which city how component ooh he does notice the difference in revenue but it's clear that's not necessarily enough to get to the next step in the case so the best way to go about it would be well we can do this by revenue I'd also want to understand risk and our likelihood of success how our supply chain would work in different areas and in this point I have to push Dave to the next step and he does a great job after he gets that but this is one of those little nuances that will make the difference between a good performance that will probably get you to the next round and a great performance that will make you stand out I'd be interested in looking at competition right so if I were looking at New York what does the rest of the market look like for illegal alcohol right it sounds like there's 50 million dollars of market size potential here in New York I don't know how fast it's growing but you know if there's another famous family that's really dominating that market doesn't necessarily make sense for us to go in there unless we kind of strike a partnership or take them out or something of that sort so I would love to see you know particularly in alcohol and loan-sharking what the rest of the market looks like in some of these big cities absolutely so you have competitors I think it's really spot-on and fantastic any anything else you'd want to look at in terms of what would be an issue with going into a totally new region um we could look at potentially consumer tastes right so I know that here in Chicago there might be certain types of alcohol that we really liked milord for some reason maybe producing a lot in the lore and it may not be very what hasn't been said about in the Lord that hasn't been said about fertilizer so you know that that's one potential thing is a look at consumer taste and just the profile of what people are actually drinking there I think that's something worth looking at and on that yes so we actually did a a pretty in-depth market entry research project looking at all the different cities okay and yeah but to get your thoughts on what what we see all right so willingness to jva its joint venture right correct and so it sounds like New York obviously is not really willing to partner with us supplier relationships looks like we're covered their regulatory relationships so tell me a little bit more about what that means right so over the course of your career as a consultant you're going to come across a lot of different terms that companies have made up you're going to hit a lot of different industries and there's going to be a lot of terminology that you don't know so if you don't know what something means always better to ask about it even if it's something that could be relatively basic it's better to get the clear definition as opposed to operating under the assumption of being wrong right where relationships are how many of the corrupt politicians and police officers do you have some type of relationship with got it okay to get some cover in this yeah an error all right that makes sense one ruthless main player Charley Columbus one minor player Tony unlike unlikely to stay in the business one main player Bucky good relationship dislikes Columbus Los Angeles very fragmented and it sounds like no willingness and so when I look at this it sounds like I actually brings a couple pretty interesting points the first thing that jumps out to me here is that looks like we have a willingness to partner here supplier relationships yes and no regulatory but it sounds like this main player Bucky might have some conceded that that buck was operating in Newark and what I like about Newark is its proximity to New York City right absolutely which is that if we can get into Newark kind of test the grounds there it might be it might make a lot of sense to have a strategic alliance here to go into New York City and take out Charlie because it looks like there's a little opportunity here with with Tony potentially leaving the business right correct and so my first potential thought here is that though you know Newark is smaller and won by a lot by proximity and by its market dynamics we could use that as a first entrance yeah but the long plan here is to go into New York City which is much bigger and then eventually take over that market right I mean I think that's a fan Masek idea and I'd say for the long-term strategy that's spot-on now we actually talked to Bucky Johnson yesterday and he gave us a proposal for a deal and the conditions were that our pone Co would get 2/3 now while you're often going to get data in the form of an exhibit or a chart sometimes you're not going to get data that in that format sometimes the interviewer is just going to read off a bunch of numbers and you're going to need to write them down and start doing calculations so that's what's coming up next and I suggest you practice and follow along with the video out we actually talked to Bucky Johnson yesterday and he gave us a proposal for a deal and the conditions were that alp own code would get 30% of all alcohol loan sharking and gambling business okay he'd pay a three million dollar fee for this okay for this opportunity okay anything else you'd want to know about this you know in order to figure out how well we do we'd had to figure out what we plan to make in that market right hey so it looks like we get a share of something and let's call it acts right yep we don't know what that is Ray our costs are three million are there any other costs that we would think about there in terms of you know what we go after and then the last piece is probably you know what is just our margin on that right and so if we're taking X dollars in revenue right we're going to take a 30 percent cut so the one thing that I want to emphasize here is it there's a temptation to sit there and just put your head down and start doing math for a little bit and that's probably the easier way to do math but it buys a lot of time and you're actually speaking out loud and it shows the interviewer what type of logic is going through in your head when you're doing the math and there's a lot of value to that because remember part of what they're measuring is not just what you're doing but how you're thinking about it so talk out your math at one additional point on there is at the end of the day consulting this business client services business the more client friendly you can be in your case interview the more that your interviewer is going to think yes I'd be really comfortable putting this person in front of a CEO or a senior manager at one of our clients so this is a really good skill to heavens a really good thing to practice that's going to pay dividends in your interview of that yep and we have to pay costs some cost value right yeah many of the subtract this flat for you three million dollars and so it looks like the missing piece are you know what percent of the market we think in capturing revenue what our cost structure is and then subtract the three million dollars for you to see if its profitable my short-run yeah I mean I think it's spot-on I'd say for the revenue side once Bucky Johnson and Hal polka got together they basically take over the entire market okay I should be a clean suite so that means that an alcohol gambling and loan sharking there's a combined 40 million to take here correct at thirty percent of that ten percent is for so we'd make twelve okay um a million just in revenue so take it with a three million flat and we're at nine million before that just so our variable margin which includes labor supplies disjunction seventy five percent seventy five percent margin is so decrepit for gross margin so we say okay so that's nine million that will just make in revenue right right and then our fixed cost of going into there okay so our overall labor weapons bribes warehousing and supply chain office space comes to a total of two million dollars two million dollars okay so another two from that so we start with this is twelve that we're going to make right and then we take away our cost the three million to get us to nine all right and then you said there's a two million dollar fee in fixed costs right which brings us to seven mm-hm and then there's this three million dollar entrance fee from Bucky which brings us to four million dollars that we could we could potentially enter right so correct it's a small piece compared to kind of overall portfolio you know but it's still you know almost a fourth not quite right yeah so to me that suggests that it would probably be worth doing especially since it is positive off the bat yep it's a worthy investment making and making and you know this obviously pays out over time yep and it gives us the opportunity to claim a long term right so you know the first conclusion that I draw here is that yes it does make sense for so a lot of times at the end of the case you're going to find you made conclusion you did some math you synthesized your findings and now you're sitting there wondering am I done what's going on this is a great point to look back at the original question and say did I answer this question do I have enough information to go to my conclusion and for this specific case if you remember the original question was how do you help how poka increase their revenues by 50 percent so now I think all the work that we had done previously and tied that back to the original question so is this getting us to the 50 percent so if we were to look first if we're just gonna go it just kind of let let everything run how much growth you think we would get got it so would we get to 50 percent okay so as it stands right now we're at 20 percent right and so our current business makes twenty thirty thirty-five and basically zero right and so 35 million a year annually right so growing it you know essentially you know this three million it cause is not is that an annual cost or that's a one-time cost that's just a one-time one-time cost so really what we're doing is we're making seven million a year or not sorry that's in profit right we're actually looking at revenue here which is actually this 40 million initially times the 30% which is that a twelve million correct so we'd be hitting the twelve million here annually so would we be able to grow at fifty percent at least in the first year mm-hmm you know half of 35 is seventeen and a half and so we wouldn't be able to hit it mm-hm initially in that first year but it's tough to project out second and third year from there that's a great point but we also have the organic growth just from each one of those industries that's regular alright so we have the 20% already growing right for X I'm here yeah so that gets stacked on 20 percent ten percent to twenty five it's seven right so it's actually 19 million and so combined between the two sources of business we do have enough to cover the essentially seventeen and a half needed for the 50 percent growth that we're looking for absolutely so how panca just came from picking up some supplies and cuttings on his way over and you'd love to hear your Rek final recommendation all right so what I would tell how all right so the final moment the conclusion the opportunity to impress right so I actually have a five-point framework here that I like to use for conclusions that works pretty much in every single case and so the conclusion looks like this right first repeat the question back but don't spend a lot of time line like maybe one to two sentences second immediately go into the recommendation and state it out front third back up your recommendation with some of the data or some of the facts from your case fourth take a step back and think about some of the secondary implications what are some other things that we should think about and then fifth restate the conclusion or recommendation and close strong with a final point all right so what I would tell how is that I you know we need to expand immediately and we were in Chicago we like it but we need to go to Newark the benefits of Newark is that you know we can strike a partnership with our good friend buck Bucky that would net us probably 12 million dollars annually in the first year and on top of our current growth in Chicago would allow us to hit our target of 50 percent annual kegger probably with even more opportunity for expansion once we take over New York in the long run and that's kind of the next consideration and so and the overall thought here is let's go to Newark let's do it let's go to Newark all right all right oh the case is over it looks like we're going to New Jersey dirty Jers dirty Jersey so overall it was a solid performance yes oh my take on this is that I think the fundamentals were mostly there you know that includes coming up with a framework that's logical and fits the case and is customized that includes reading the charts and actually deriving insights from the charts and driving towards the next steps doing the calculations and arriving at a conclusion that makes sense for the problem at hand I think there were a couple areas that could have been better in terms of fishing a little bit for information when I wasn't sure what was going on but the really important point to remember here is that a good recovery oftentimes Trump's any kind of little stumbles that's a great point a great recovery can offset those minor stumbles so that's our case thank you for watching our live case demonstration so we will be uploading additional case demonstrations over the coming days so if you'd like to see more please subscribe to consulting confidants YouTube Shadow and lastly if you're curious about how you'd stack up against other Consulting candidates from the perspective of a consultant at a top firm check out consulting confidant comm here you can schedule a live case or mock fit interview with a consultant from a top consulting firm like BCG McKinsey Deloitte etc after the case you'll get customized feedback that can take your case performance to the next level so thanks again and good luck

Channel: Consulting Confidant Case Prep

Views: 312,716

Keywords: Consulting, case interviews, career, interview

Id: SMI_hAzcOfc

Length: 25min 53sec (1553 seconds)

Published: Sun Dec 27 2015