Mock Case Interview at Bain

[Music] what's a case interview like how should you interact with their interviewer how long should a case interview take these are some of the questions that we get as people are preparing for their case interviews with Bay in this video you'll get a chance to see someone set up their analysis and their framework work through their analysis including doing some math and synthesize their recommendation at the end we hope this interview example helps you feel prepared and confident heading into your interviews so let's take a look at a cas interview hi Eric great to meet you great to meet you so glad to have you here today excited to be here a little nervous but excited yeah how are you doing just more generally I'm good I'm good yeah office is beautiful everybody's been great so far and just yeah excited to get going with the case I'm so glad well I'll be the one pushing us along don't worry if I finish us up move us to another area I'll be in charge in terms of the time management good to know thank you great so should we jump in yeah let's do it all right so let me give you a little bit of the context of the case now one thing I love about this one is I do all consumer products and Retail work for you know my normal job here at ban and so this is one of those consumer products types of cases and it's based off of a real Bane case okay and so let me give you a little bit of the situation we're going to Blind all of the company names for the purposes of confidentiality so our client is foodco they're a multi-billion dollar client that has leading Brands across many different food categories right now they've narrowed in on the alternative milk category they believe it's growing quickly has some attractive elements to it and alternative milk you can Define as anything that's non-dairy plant-based so things like almond oat coconut soy you name it all goes within alternative milk I think I used almond in my latte this morning so there you go so you're you're familiar already they've partnered with Bane to determine how they want to enter and whether or not they think this asset is the right way to enter the space okay because they're pretty familiar with this Market they've narrowed in on a Target named smilk and smilk in terms of its profile it's pretty attractive profile that's why they're interested in it okay to give you some facts on it it has over the past three years been doubling its profit each year oh wow it's impressive very very strong performance overall it has about 6% share of the alternative milk market and um is expected to grow to 8% okay so moderate modest growth right now this smk has been able to expand across Europe and the us but foodco for this particular piece of work is only interested in the US market okay good to know so we'll be focusing on that now here's the real complicating element of it they expect that smk should be able to increase its profit by 6X over the next 5 years okay so as we think about this overall I'd love to have you tell me a little bit about how you would approach assessing this question and in particular we need need to understand whether or not this 6X profitability growth is feasible okay great I think I understand the situation can I ask a couple clarifying questions sure absolutely awesome I imagine they have different business units like Al men soy oat any gaps in their portfolio that should be aware of not that it's relevant to the case currently gotcha and then finally just in terms of understanding does spco have any other specific acquisition thesis that I should be aware of any metrics that they want to hit or is just broad assessment get our opinion whether it's good or not you know that's a good question so mostly they're focused on whether or not they can achieve the profit okay but what's equally important is thinking about share and the trade-offs between the two of those okay awesome I think I understand the problem excited to get into it you might have to take a couple moments to structure my thoughts awesome so as I think through this problem of how to assess uh smilk from food Coast perspective and think through whether the profitability target is achievable there's really three buckets that I want to look into first is the alt uh milk Market itself great second is a deep dive into smilk and their internal operations perfect and then finally I have some other considerations and RIS that I want to look at Great before we jump into your framework can you tell me why you thought about these three as being the main buckets that you wanted to focus on for sure so I wanted to first start looking at the market because I think a core tenant of any good acquisition or investment is that the asset is positioned in a market that is favorable growing has Tailwinds and headwinds Etc then once we feel comfortable about that that's a large and growing Market smilk is well positioned within it making sure that smilk has everything that they need to to be able to succeed capture share grow Revenue decrease costs which will ultimately help us to improve profitability great and then finally these like other risks are considerations are more kind of deal specific in terms of you know how might we Finance it uh what is the balance sheet of Food Co look like can they bring on debt um because I think that will impact what the ROI could look like moving forward in terms of opportunity cost I know that there's zero datea on smilk right now but are there perhaps other ways that they could enter the market um should they do a joint venture with somebody should they just build it organically themselves or could there be a better Target and then finally with any acquisition I think making sure that we don't lose sight of culture to make sure that it'll fold in nicely and that that transition plan would go smoothly but unless there's any other questions on kind of how I've I've thought through this I think I want to start with the initial hypothesis that yes this asset would be a good acquisition for uh food Cod to make and that they will be able to achieve the The Profit Target of just remind myself 6X in in the next 5 years MH and so in order to start testing that we' really start to like looking at this first bucket in terms of what the overall alternative milk Market looks like and ideally Broken Out by segment perfect is that where you'd like to start yes it would be great and then after we look at that what are the most important elements within smilk So within smilk what I would love to understand is looking at their historical performance broken out ideally by business unit um the reason I want to look at that is to get a sense of how they've gotten to where they are today I know that they have doubled profit every year for the past three years which is really incredible growth right and obviously there's multiple ways that they could do that they could be gaining market share they could be introducing new products or they could be cutting cost or some combination of all of that and I think how they've gotten to where they are today will give us a good insight into what future growth opportunities they might have and help us to get a really good understanding of whether or not that 6X Target is achievable fantastic I like how you're thinking about it I also like how you're bringing it back to the objective around this 6X so let's start where you suggested okay and I have a slide here that gives you a picture of the market I would love for you to tell me what does this tell you about the Dynamics of the milk Market okay if I can just take a couple moments to orient myself so what I'm seeing is a chart of kind of the US milk sales over the past 10 years forecasted uh into the future for 5 years from now and the first thing that immediately jumps out to me is you can see that the overall Market has been in Decline and forcasted going forward it's at best going to remain roughly flat that's right so from the overall perspective not great but what is exciting for smilk is when you do a deep dive into the alternative milk segment that is actually expected to grow and and quite considerably over the next 5 years a low double digit ker is actually pretty exciting to me and so feeling feeling good about that and looking closer at the data row I'm seeing some numbers that we can manipulate in order to get a sense of exactly what the size of the alt milk Market is today and then what it's going to grow to five years from now which I think will be a good starting point to help us understand the feasibility of the 6X Target agree let's go ahead and do that okay so uh in order to combine these variables I'm thinking we first take the alt milk share uh today multiply that by the overall Market size which will give us the alt milk Market uh in dollar today and 5 years from now putting some numbers 19 billion is okay if I round that yes 19 billion times 11% that is roughly 2 billion 2.1 billion so that is today and then in 5 years we are going to uh 19.2 billion time 20% Which is 3 .8 billion but I'm going to go ahead and round that to 4 billion so like I said um we now have a better sense of what might be achievable if schil just kind of maintains market share maintains status quo going forward it's exciting it's 2x um but it is a far cry from their 6X Target and so to update my hypothesis I still think that there is reason to believe that this would be a good acquisition for foodco however I'm more bearish about the achievability of the 6X profit Target in order to get a better sense of that achievability I would love to look at any internal financials that we have from smoke to see how they've grown over the past I'm so glad that you asked and and had us go there because I'd love to think a little bit about the feasibility of this share gain now that we've isolated that they will need to gain share to reach their targets potentially or other levers I'd love you to tell me a little bit about what this competitor Market view tells you about their ability to gain share okay just orienting myself quickly so what I'm seeing like right off the bat is not too long ago only a year and a half um there weren't that many players and smilk was still very ncent but over time smilk has moderately grown its market share seems like they've plateaued very recently and they are the smallest player in an ever increasing competitive and crowded Market correct and and then just interpreting uh the names here large snackco looks like the market leader which could potentially be not great for smoke if they're going up against somebody that is very well financed uh and very entrenched in the market and so uh from looking at this I'm feeling even better about the view that the 6X uh profit might not be achievable simply because I don't see an easy win here in order to gain share however I'm not going to give up um I think some things that could help them achieve that if any of these competitors are potentially acquisition targets and food co could do a quasi like roll up strategy that's great that could be a way um but uh what else would you need to know about smilk to gain confidence that they could gain share I think in order to to gain confidence about how they could gain share I want to know a couple of things one is I guess I would bucket this kind of external and internal um considerations externally I would love to know how customers view them are they differentiated in any way from a product standpoint or a capability standpoint such that they could steal share and then second um from the internal perspective I would love to know what products they offer today are there any untapped geographies that they're not in for example are there any products that competitors offer that they simply lack and then I know we're focusing on grocery but there's always opportunity for partnership there's always opportunity for um you know selling your brand outside of grocery stores like coffee shops um you know airport lounges Etc so that's great so to update my hypothesis I still think that this is a good asset so I feel good about um the acquisition thesis there however I'm increasingly bearish on the ability to hit that 6X uh rep or profitability increase over the next 5 years in order to feel more comfortable about that part I would love to look internally to smoke in terms of their financials to understand how they've grown and like you just suggested are there any opportunities that they could uh kind of untap potential to steal share that's great I think we're going to explore both the internal and the external that you mentioned so first let's go to the internal I have some data on the company okay could you first Orient me to what you see in terms of the data you do have and what you would need in order to answer this Sixx profit question so what I'm seeing like you said we have financial data for smilk broken out uh from their us business and their European business and looks like it's a little bit of a puzzle to solve in terms of uh some some blanks that we need to fill in love some logic games yeah love love some logic games and so what I'm seeing in terms of how to well just to react like very quickly to this it's interesting that the US business is only uh a quarter of overall profit profitability compared to the European business which is observation which is important because we're only focused on the US from food Coast perspective the second thing that sticks out to me is there's quite a a delta in terms of the margin between the two geographies and so you know to keep this on our radar moving forward would' love to understand why that Delta exists and if there's any way that we could potentially bring the US business up to up to Snuff with what they're seeing in Europe but to get to your question in terms of how to fill this chart out out what I'm seeing is we have Revenue today and we have the margin so we can back solve for this profit figure right here and then we know in the US what the market size is today we know what their share is so that'll give us this value and then same approach knowing the margin we can back calculate what profit is that'll leave this hole and then we can kind of fill in from there now before we do that going through that process what is it going to tell you about whether or not they can achieve that 6X profitability so what it's going to tell me is it's going to tell me what profit is today and then we know what profit is today we know what the market is expected to be 5 years from now what their market share is expected so that'll give us Revenue right then if we multiply by a margin that'll give us what if everything goes as we're forecasting no changes in margin what profitability would be right just looking at these numbers if we do that like we said from before with no material change and share they're only expected to gain two points that's not going to close the gap unless we see some sort of margin increase like that's also not going to close the gap but I do think that there are still ways that we could achieve this one would be if we could increase the profitability of the US segment to get to Europe that'll get us some of the way my intuition is not going to get us all the way but there also could be some margin Improvement that you would see from synergies rolling into Food Co I would expect that distribution Logistics Etc would get cheaper also purchasing power of a really large company could help get the cost of goods down for these different types of milks materials Plastics Etc um and so I'm kind of imagining a sensitivity Table to where if like if we know what the market would need to would look like in the future there's some implied share that they would have to get to assuming profitability Remains the Same and and then vice versa if we assume no share gain but uh calculate what profitability the margin would need to increase to hit the target that'll help us understand the extremes of the sensitivity table and then help us get a better sense of could reality exist somewhere in the middle great and bound the potential outcomes I really like how you're thinking about this especially because there's a lot of things that could go right to reduce costs overall and help them hit their margin targets how are you thinking about the trade-offs though some of the headwinds they might face great fall out there are natural tensions between trying to increase market share and thus increase Revenue as well at the same time as trying to decrease costs on one hand you usually need to invest for growth but on the latter situation of trying to improve profitability that often times comes with finding places to get better more optimized with your budget and maybe requires less investment um just to protect that that margin yeah so glad you're acknowledging that why don't we go ahead and do the exercise us suggested so that we can really get our arms around what the real potential might be to increase profit is it okay if I just write on please do so um revenue is 320 million profit margin is 15% so to arrive at this profit figure is just 320 million time 15% and that will give us the dollar value so 10% of 320 is 32 half of that is 16 which means that this is 48 million great um what I said earlier for the US business we know that the market is 2 billion today and they have six% share so that is 120 million which means 320 - 120 is 200 million we know that if this is 10% um 10% of 120 is 12 and then 18% of 200 is 36 million which checks because 12 + 36 is 48 so now that we have all of this mapped out we can put some specific numbers to what their actual profit Target is great and so if they are at 12 million today and they need to 6X that means they need to get to 72 million mhm and so like I was saying in terms of understanding how they might get there we know that that there's going to be some latent growth assuming they hit their market share targets and the market grows like we expected right so I can figure out what that contribution would be and then the Delta would essentially come from the sensitivity table that I outlined that's plan great okay let's go ahead and do it so um we know that go ahead and transfer over here Market 5 years from now is going to be 4 billion and they're going to have 8% share which translates to $320 million in in revenue and then so just from that if they keep the 10% profitability margin that means that they are getting to 32 million so that's good like we we've already talked about but it is still cry $40 million short we we need to more than double this and so that let's go find how we might do that and so from the revenue marketshare perspective uh and then looking at it from the profitability perspective so when I look at how much they would need to achieve we'll we'll solve backwards here so we know that they need 72 million if we are going to assume the 10% profitability mhm that's simple math we know that they need to to grow um to $720 million of Revenue right at that profit level at that profit level that seems like quite a bit um if we go ahead and figure out what that implied market share would be uh very quickly so we know it's a 4072 so that would be one 4 3 2 18 18% market share MH which is triple from what they are at today um which is a lot to gain especially since they plateaued out over time did so again I think we're going to need to dip into this profitability perspective yes and so where I'm thinking about here is we'll assume that they maintain share uh that we're forecasting of 8% so we know that they'll be starting with $320 million of Topline mhm again we're trying to solve for this 72 million and so now it is just figuring out what the margin is and if I do this it looks like it is just higher than 20% but to put some math to it 22 2 64 and that leaves us eight so it's like 22 to 23% great so 23% again that's big but if we look at the European business as potentially where we might get to so upper bounds 18% call it 20 maybe if we get some synergies from foodco I think we need to do some further analysis to see if we can unlock fully unlock this 23% but I'm now getting a little less bearish than I was originally so I'm going to update my hypothesis that this is a good asset I like the market that they're in um I like the growth potential from the profitability perspective perspective the the lever that exists particularly here in terms of matching the European business um and I think a combination of these two could make the 6X profit uh Target achievable we might not get all the way there but I think we might get pretty close which I think would be exciting to Fuko right could still make it attractive and and I like your sensitivity because you know you don't need it to be on either end of these extremes but we are asking for a lot to go right share gain and margin so why don't we take a look at some of the external factors that you had mentioned um so I'd love you to take a look at this and tell me what it it tells you about the competitive market okay so there's a lot of information here if I could just Orient myself quickly so what I'm seeing is smil compared to um looks like a lot of the major players from this early market share map that we looked at earlier and what I'm seeing is first validating that you know smilk is that where they are today they a smaller player in the market and then you know alt milk 5 and large snackco are kind of the Behemoth right which it's exciting that in the last 18 months they've been able to do this again I think points to the attractiveness of this Market but also paints a potentially negative light from the competitive landscape I love seeing for smilk some of the word associations here fun delicious premium like that sounds like a really good brand that could be you know kind of the core tenants and assets that we could leverage for for future growth again this High customer satisfaction I think is only solidifying that this might be bad right now the fact that customer awareness is low but if we're starting from a low base I think there's opportunity that we could use to increase um that going forward which would help us increase sales help us improve the market share that we have and then the pricing difference is quite interesting as well it looks like we're roughly kind of middle of the road whereas you know there might be some upward Potential from pricing that we see um you know alt milk has gained a ton of share yes people do view it as overpriced but um you know there might maybe we don't go all the way to $6 but it I think there might be some room especially because we're seeing as premium and that's not a word association I see here so maybe the willingness to pay for a premium product should be there and so again I think going back to the math that we just did in terms of how to steal market share this could be an Avenue and pricing is really exciting because it is a lever that is not intention it flows to the bottom line and so um with this again hypothesis I feel even better about this asset after seeing this table and I also feel a little bit better about the profitability target do we have information on customers willingness to pay or the potential to run a pilot in terms of to get some data of How High we could take prices without damaging volume that's a great question absolutely something that we would do and did do Under the course of this but one thing that I you know would love to know quickly is as we think about deepening our insights and analysis for Food Co and we know that they are fantastic in terms of building platforms and acquiring and I think it was a comment that you made earlier as well that they could start to think about that where do you think that they could go here in terms of their their overall portfolio yeah so I I think it was one of the when we were looking at the market share map like potentially a quasi rollup uh strategy and if I if I go back to the math that we calculated earlier 18% total market share would help him get to that Top Line and looking at this um you know alt milk one adding on would help us get there and then these other three targets if we were to uh incorporate them into food Coast portfolio that would help us to reach the Target and exceed it obviously becomes the question of are they viable are they up for sale um and again all of the other considerations that we outlined in the original framework of like culture um how we would Finance it Etc come com to mind and if they are you know adding to their profit profile overall that great point cuz we don't know what the the profitability of these companies look like 20% share gain in the last 18 months I imagine that came with quite a bit investment and maybe their margins look very negative very likely well this has been fantastic I'd love to take a step back and and just ask you at this point knowing we don't have all the information that we typically would have where where is your recommendation and your hypothesis at this point my recommendation to foodco is that they acquire smk for the following reasons one I think the alternative milk Market segment is exciting expected to double over the next 5 years and second I think smilk in terms of the assets that it is bringing is a great platform to be able to grow and get close to the 6X profitability Target customers love it it's seen as a premium brand and there's a lot of potential that we could tap into there especially if we consider synergies that food co will bring however this recommendation is not without risk like I alluded to the 6X profitability Target is quite ambitious we've run the numbers and there's going to need to be both Market um share gain as well as improving profitability in order to hit that Target but understanding we might not get all the way there I would love to for next steps start looking into different pricing strategies that we could employ uh in order to prove Revenue improve market share moving forward and then there's always the uh ability to negotiate with smilk on the acquisition price understanding that their expectations might not be grounded fully in reality that's fantastic I'm I your rationale makes so much sense and I'm so glad that you've highlighted some of the key considerations and risks especially around pricing because to give you a little bit of insight this project was based off of a real case and there wasn't a willingness to pay that higher price so made that profit Target even more tricky but you you absolutely targeted the right next steps here for this project awesome so very nicely done and it was wonderful to meet you yeah thank you for working through the cas me take care I hope this video is giving you valuable insights into the mindset the preparation and the approach you can take to case interviews I'd also encourage you to take advantage of the tips and tricks video that you can find on our YouTube channel or our website and there's a lot of other resources at bane.com careers to help you prepare for a successful interview [Music] process

Channel: Bain & Company

Views: 154,990

Keywords: careers at bain, mock case interview, interviewing at bain, baincareers, case interview bain, interviewtipsbain

Id: ZqouKTczJSc

Length: 28min 18sec (1698 seconds)

Published: Tue Dec 19 2023