The quickest way to learn to solve cases better is by taking our free course at www.craftingcases.com/freecourse. You'll learn the 6 Building Blocks to solve any case, learn a step-by-step process to solve each of them, and get tons of video practice drills to internalize the techniques.
Looking to start applying for consulting jobs and I'm glad I found this video. I interviewed at EY years ago and bombed the interview, mostly because I didn't point out information that I thought was completely obvious. For example, in this video, the first thing you say is "Can the business make money?" and my first thought is "Well duh, if you don't think the business can make money, why are we even here." I guess consulting interviews really want you to break down every tiny aspect of running a business. Definitely an important concept to start wrapping my head around. Thanks guys.
Great video guys, helped me out a lot to prepare. After 2 job interviews and a full assessment day with cases , i found out last week that i got the job! Well done! Thanks
First Mock Video that feels real. All the other ones are rehearsed with the people coming with amazing financial ratios they learned about 20 minutes earlier! Thank you for making me less scared to do my interview on Friday :)
This mock interview looks very real to me and thank u for making this video to let me know what is a good way to interact with the interviewer and to solve the case problem!!!
I stumbled on this video a few month ago and went through the prep material on your website. Got the job. You guys are so on point! Thanks for all your work!
Watch at least the Brainstorming module of our free course if you don’t have the time for the whole thing. Most important module to not make the most common mistake that gets ppl rejected in their first rounds.
Great video. I would also add "Logistical dependencies" as well since deliveries will be dependent on third party companies such as UPS, FedEx, USPS, etc.
@@dr.wezisunkutumd8745 logistical dependies is an operational constraint which can be solved, not really a big issue for someone delivering fabric items only
Congratulations guys. Incredibly helpful. But I think there is something that needs to be clarified. To the question asked in 21:30, I would aske if the increase in sales caused by those levers affected the other competitors or in the other hand if they are 100% new sales. Because this fact changes the result. In the case the increase of sales comes from the decrease of competitors sales, then the answer is correct, because the global market doesnt change. But if the market expands as a result of our new strategy, then the final market share is different. For example, if the Total market in year 1 is 100M, we got 12% of that (12M). With our new strategy, we increase that number to 21.84M (calculated as in the video), but the global market also increased, it passed from 100M to 100+21.84-12 = 109.84M. So our final Market share is 21.84/109.84 = 0.1988 = 19.88% We could also calculate the final number in terms of the percentage of the new sales origin. Please, note that the numbersI chose are just to make the calculus easier, but it is all about the percentages, you could try any number and the result will be the same. Apart from that, great great video.
first of all,thank you for your video. I am not here because I want to interview for a consultant job,I am here to learn analyzing and presenting and I think I've learned a lot today. Thank you.
Thanks for uploading this. For some reason it's so god damn hard to find simple examples of question and answer for case study interviews. Instead it's all 8 hour-long seminars discussing theories and methodologies behind case study interviews. This is clear and concise and gives you a feeling for how to approach it.
For the analytical question - it would really help to have a display of the question on the screen for the audience, as I had a very hard time figuring out what Julio said even I increase my earphone volume (since he isn't speak directly to a microphone on him)
Nice video. One thing though; the math is WRONG -At 22:30 in the video you take the old marketshare and multiply by the company's increase in revenue to find the new marketshare: 12%*1.4*1.3 = 21.84% The result seems reasonable and so you dont notice the mistake. Assume instead that the old marketshare was something like 60%. If you assume the same increase in revenue and do the same calculation you get: 60%*1.4*1.3 = 109.2 %. Now the mistake becomes obvious since you cant have a marketshare over 100%. -To make the calculation correct you need to factor in that your increase in revenue makes the market as a whole larger. To factor this in we need to divide by the new size of the market. The old market was 100%=1, where we had 12%=0.12 market share. The size of the new market is 0.88+0.12*1.4*1.3 so we must divide be this, doing so we get: (12%*1.4*1.3)/(0.88+0.12*1.4*1.3) = 19.88% is the new marketshare. And if the old marketshare was 60% the new one would be (60%*1.4*1.3)/(0.40+0.60*1.4*1.3) = 73.19% which is below 100%
Got my first interview (and case(s)) in two weeks. I'm going to watch as many of these as I can. I'm a little nervous as these videos/answers are amazing. Really hope I can get some good ideas and smash it out of the park
At 23:00, they should be using a geometric mean to calculate the growth of market share. It's not 12%*1.3*1.4. Instead it should be 12%*[(1.3*1.4))^(1/2)]-1. The impact of those 2 growth initiatives is happening in parallel, not one after the other.
Good video. A great example to candidates. You should always ask questions and ensure that you understand the problem at hand and focus on it. Show confidence, don’t be afraid and don’t bull shit.
I am interviewing with McKinsey this coming week. I sure hope I don’t get a demerit for using the word awesome (if a situation is awesome). It shows passion. Coming with 8 years consulting experience from the largest engineering consulting firm - our interview processes are quite different!
Great interview. I had a mock interview with McKinsey and have a formal case interview today (both over the phone). The interviewer in the mock interview advised me to only take 1.5 mins, possibly max 2 to come up with my structure. He said he'd prompt me for an answer at the 2 min mark, and in fact I slid in just shy of that, which he mentioned as well. In the last maybe 20 seconds, I had come up with a bucket that was very important to the structure, so he did say that my taking this time to add it in was well-used.
I think Julio cross questioned how customer loyalty would affect attractiveness of the market because if customer loyalty was high, it would be harder to pull customers away from existing businesses and hence harder to grow your customer base
Damn, sounds like a real consultant - no experience of doing, only experience of advising. If interviews are like that, probably MBB and big4 advisory departments are useless.
Thank you, guys! Nice case, slightly different from the normal acquisition cases. And I did this after your fundamentals course and did very similar, in the brainstorm it was nice to see that i was able to capture the mkt place idea ! Obrigado pela ajuda.
Hey Matheus, very glad to hear that you got to a similar type of answer after going through our free course -- seems like the course is doing what it's supposed to do :) I'd love to hear more about what you thought of the course.
@@IntlDebtLawyers Thats not Spanish, its Portuguese for "Thanks for your help", he is just trying to be nice, talking un their native language. You are just as ignorant like stupid.
This case is oddly unique making it hard becasue the client wants to "buy himself into enterpreneurship". A standard framework for Mergers and Acquisition wouldn't match in the first half of the case. Usually, it is very often a company that's looking for help asking for choices on how to keep themselves profitable, by for instance buying merging/acquiring another company or it's a company that's directly asking if they should merge/acquire with company X Y Z. I was confused at 10:28 suddenly that client what's to acquire the company and don't even know exact company in question. Their revenues, their competition etc. But it seems like it can happen that your interviewer will suddenly fast forward so that we are not even required to decide yes? This one here is different and I can totally understand why it is hard. Thanks guys very much for the video. Great job!
Interviewers do fast forward sometimes. Easy way for them to test different skills. Awesome that you made the connection between this case and "regular" M&A cases too! Specific cases like this one are getting more and more common because they make it ridiculously easy for interviewers to see who's trying to force fit frameworks vs. who's actually thinking about the problem.
Attractivness is always personal, as it depends on one's rational opportunity cost ($1.000.000 of annual net income from bed & bath business might be attractive for me, but not for someone who is doing $2.000.000 let's say on Wall Street) & emotional preferences. I would probably emphasize it in the very begining in order to make case solving more comprehensive. In addition, I think 2nd and 3rd points are actually subcomponents of the 1st one. Generally, I think there should be two main points - How much money he can make now? And how much money he can make in the future? And the rest parameters are subpoints, except for the 4th point, which can be found out only by giving the above information to that person who asked this question and asking him whether it is attractive for him as you cannot assess someone's opportunity cost and emotional preferences.
Incredibly good work, especially your 5 ways to be MECE tips. resolved all my already done cases with those powerful tools in mind, and it helps alot to bring a decent structure to the case solving! :) Keep up the good work!
Really like the content. If possible please try to keep the mic as close as possible. Just a suggestion. Recently came across your channel. Really love the work. Cheers.
The customer loyalty response at 10:30 seemed sub par. Full disclaimer: I haven't yet watched past that. Customer loyalty is primarily a function of the customer's own behavior and secondly a function of how you treat them (customer service, price and product differentiation, etc). We can assume customers are either "recurring" (have purchased home goods items before) or "non-recurring" (new customers breaching the marketplace) to the broader market .If we assume that customers are inherently loyal and sticky, then it is a problem because that would make it increasingly more difficult to capture already "recurring" customers (they may be loyal to a different company). If we assume the bulk of the customer pool is "non-recurring" then that means you'll be able to capture them more easily and keep them on with brand loyalty, but it will be more difficult to cross sell to them since they are new to the market altogether.
Great work Bruno and Julio! But I have a question on the "Can he hold a competitive advantage" criteria and the 3 points you mentioned. Why would it be important to ask how he can differentiate, what ways can he be more efficient or what are the barriers to entry when the question is "Is the market attractive"? Aren't you answering a different question of "how does he become successful in this business"? Why would there be barriers to entry when the business he is trying to purchase already exists? I came up with a few other points under the "Competition" criteria. Can you let me know how these look? - Who are the other players in this Bed & Bath ECommerce space and what are their market shares? - Has anything changed recently in the market? Have their been any acquisitions, new product lines? - Is there innovation in the space and is the technology used by competitors the latest and greatest or is it quite archaic? Also, isn't it important to mention "Risks" as one of the 4 factors in evaluating if the market is attractive? Risks include regulation, health concerns (allergies), geopolitics
So, some markets allow for more competitive advantages than others, and being in a market that allows you to have those is one way to know if the industry is attractive. The three examples that I mentioned (opportunity for differentiation, for increasing efficiency and barriers to entry) are the main ones I thought when doing the interview. Btw, barriers to entry mean it's tough to enter and scale, not that it's impossible. Businesses exist in all industries with barriers to entry, of course. I recommend you read Porter's article/book on the topic. As for your points, they look fine if you can back them up (aka: explain why each helps answer the question). Regarding the risks you mentioned, they don't look relevant to me. You're selling towels and bed sheets, so regulation/geopolitics doesn't apply. Health concerns could apply, but it's not a big risk and you have control of the product, so I wouldn't say it affects industry attractiveness.
Why you multiply with 1.4 and 1.3 ? then it basically means that we first did the marketplace move and get the effect than we execute complementary item move.
When the point about the branding of website is raised & he said it's not really measurable, the thing that pops in my mind - A/B testing. I think that is one very good way of measuring the effectiveness of website branding / changing the look of a website & if it is actually working in driving more traffic / influencing sales. I agree with rest of all the points that he makes :)
Hey Sagnik, that's a great point but I disagree. I agree you can A/B test the WEBDESIGN, but branding is something that runs much deeper. Take Coca Cola, for example - their branding is on their packaging, it's on decades of TV commercials and jingles associating them with family and joy, and it's on the fact that you KNOW you'll find it everywhere (which has dramatic impact in their distribution and bottling strategy). Or take Amazon, as we're talking e-commerce here. Their branding relates to how you'll find EVERYTHING for CHEAP and get it delivered QUICKLY. A lot of companies claim that in their website, only Amazon delivers it. Other companies don't deliver on it because it took Amazon years to develop the IT systems and logistical infrastructure to be able to do that. Can't A/B test it. And if you're looking for something simpler, I could mention Lululemon. It took them years and years of clothing R&D to be able to say "Breathe easy" on their website and be credible. So yes, you could A/B test the design and the copy of the website. But that's just the tip of the iceberg of branding.
Nice poin. I agree. But just one last point / a query rather. For a relatively new start-up, isn't Branding mostly synonymous to website design? Suppose they are at a point where they are using single channel marketing strategy - their website. Because I read somewhere in the initial days, that's how sites like Amazon perfected their branding... They would A/B test a simple thing like add to cart / buy now button And that's how with multiple successful iterations of things that worked, did they come up with their current version. P.S - I am just stepping into this world of consulting & these guiding comments from veterans like you is appreciated 😀
Chipping in here- great, authentic interview video! Brand value can be approximated by marketing research tools such as conjoint analysis. Example could be quantifying value perception on exact same shoe with one being Nike and the other off brand. Multiple brand comps can tease out relative brand perception and brand contribution as relevant to the sample surveyed. Expect different customer segments to value brand differently. 2 cents.
Amazing illustration, I have one question - What if you were asked to choose between "Business as usual" or "Change the business". i.e. choose one branch of your issue tree at the second level. How would you go about that? The reason i ask is i know a lot of hard-ass interviewers don't even give an inch so how to deal with that?
Hey Siddharth, If the interviewer asks this, one thing to be aware is that they’re not looking for “one right answer”. Instead, they’re looking for (1) a well-reasoned hypothesis, and/or (2) a way to test this hypothesis. The way I’d answer this would be to prioritize “Business as usual” with the hypothesis that it’s easier AND that there’s more opportunity in tweaking the business rather than changing its direction. Then I’d say that to test that I’d compare major e-commerce metrics of this business against benchmarks (Customer Acquisition Costs, Conversion Rates, etc). They may have the benchmarks and they may not have them. They may agree with me on how I prioritized or not. Regardless, by saying those things I give them what they want: a well-reasoned hypothesis and a way to test it.
For increase in sales, also identifying pain points for the existing customers and making the process more seemless for existing customers will also increase new customers
Hi, I just wanted to ask why we are not also multiplying by 1.8, considering that the industry is expected to grow by 80% in the next two years. 12% * 1.4 * 1.3 * 1.8 = 39.3% Thank you for the insightful video.
Glad you liked it! About the multiplications... They’re not hiring who multiplies the fastest. They’re hiring who can show a broad range of skills in the alloted timeframe :)
Great video! But please could you improve the sound quality for upcoming videos. During the case interview it was at times very difficult to understand acoustically. That would be amazing! Thanks.
nice one. congrats ! usually do they hire ppl comes from an education background that is not super attractive compares to the ones who has a MBA for example ?
Augmented Reality and Unorthodox marketing campaigns can also be a few possible solutions. I think he already mentioned it but collaborations with furniture stores is a really prospective solution.
one quick question. I'm curious in "market share question part" if I assume the total market worth 100B our market share will be 12B. and others are 88 B. our share grow to 12*1.3*1.4 =~ 22B. while assume others competitor remain the same at 88B. (neglect 80% growth which affect both of our company and the competitors) so our share should be 22/(22+88)*100 which is 20%. am i missing something??
You should not sum 22 with 88 for the future total market, as the market grows only 8% in total (If our firm grew more than that, some other firm grew less to account for an average 8%), you should instead use 100. Our share should be 12*1,4*1,3*1,08/(100)*1,08 = 12*1,4*1,3/100 = 22/100
Hi! Great video! I wanted to ask about the time Bruno took upfront to structure. He took 3min 6sec, but I’ve heard 60-90sec is the rule. Could you shed some light on this please?
Great video of how a simple question yet very important when you start to make a business be answered in structured and concrete way. I am new to this. I wonder if this analysis is similar with product-market fit analysis?
Hey Yusuf, it's slightly different. Product-market fit analyses if the product fits the market (duh). This one analyses if the market is attractive (i.e. if it's a market you'd want to be in, regardless of if your product fits it or not).
Regarding the market share projection (the analytical part), it isn't correct to say that the expected increase in sales translates directly into a corresponding increase in market share, since the total sales of the industry would also grow... Thus, the future market share will be sligthly less than the calculated value - right?
If the market size is also growing (80% in two years time), then we can’t simply do 12%*1.4*1.3 to get the future market size (here, you are assuming that the market size did not change which is not the case) plus, didn’t the interviewer ask to get the new market share for 2 years from now???
Regarding the math at the end. Is it correct to assume that the multiplier only hits after the second year market share? Why would we only go about implementing the two levers at the end of the two years? So in my opinion, the 1,82 should apply to the initial sales at the beginning of the two year span, leading to... Company growth: Current sales: x 1,4*1,3*x+0,8*x=2,62x Market growth: Current sales=y 1,8*y=1,8y New market share 2,62x/1,8y X/y=12% 2,62/1,8*12% 1,45*12%=17,46% Would this also be correct? In the end it depends on the assumptions regarding to when the multiplier applies. Best regards, very helpful video!
Hey Christian, It would definitely take some time to implement the two changes (new channel and new product categories) after our friend acquired the company. How long? Is it 2 whole years? I don't know - and in a real project, you'd probably estimate that for each action as well, and apply the growth accordingly. You'd certainly need a spreadsheet to do that, so I wouldn't worry about it in a case interview, which means that there is no ONE right and wrong timing to implement the change. I just picked 2 years because it felt reasonable and it was easier to work with the numbers. If you want to pick something else, make sure you justify to the interviewer. I think you'd be challenged by most interviewers if you assumed implementation of those two changes was instant, but somewhere in between would probably be fine. Now, one interesting thing about your calculations is that it doesn't consider that the new channel and the new product categories are gonna grow at all. I think this is the key mistake I'd be concerned with. I don't know if the new channel and the new product categories are gonna grow at 80%, more than 80% or less than 80%, but I do know it's unlikely these will remain stable. I'd have done a better job in the case had I asked that, but you can't just ignore that markets and channels grow. Hope this helped! Bruno
Regarding the sales increase: Can you really just assume that the two increases (marketplace and complementary products) are compounding? Or does this depend on how the analyses was performed? Perhaps the complementary products won't be recommended in the same way on amazon marketplace, so the 30% growth might not apply to the sales through amazon marketplace
At 17:25 there is a pop up which says Bruno missed percentage of visitors who purchase. But at that point he was talking about acquiring new customers and not increasing sales / revenue per customer within the existing customer group (which were his other 2 points) . Am I missing something?
Very good video. Currently binge watching all your videos - so please keep them coming :) One question: Given that we assumed to grow in proportion with the market, how would you change your calculation in the analysis if we grew more, or less that the overall market?
Hey Jeppe, It depends on how the data is given. Did they give a dollar amount that we're gonna grow on top of the market? Or a % of revenues per year faster than the market? Or percentage points of market share faster? If the first, we'd need to calculate revenue growth for us and dollar growth for market and divide the two (there are some shortcuts depending on the specific numbers) If the second, you can add one multiplication representing that extra revenue growth. Example: if we grow 5% more than the market in the two years, we could multiply the final result by 1.05. (So it'd be current market share *1.4*1.3*1.05). If the third, you can just add the p.p increase to the final market share metric. Try these out and see if it makes sense to you. One challenge with creating these equations is that the numbers never come your way in the same format. You need to learn to be flexible and the only way to do that is to practice with different parameters.
Really helpful and professional interview, one question I have is - There was no stating of a hypothesis at the start. Is this not essential to show to an interviewer that you are taking a hypothesis driven approach not a framework driven approach? Is a hypothesis a key part of demonstrating you have clear problem structure. Is there any point of an issue tree if you have no hypothesis to test it with ?
Khaled Oozeer I'm guessing it's because he was trying to determine whether the market is attractive (pretty general question) and there are many factors that would need to be tested, not one specific thing like you would hypothesise initially in a profitability problem (where there would be 1-2 things you need to isolate to get to the root of the problem)
And also the increase in our sales will also increase the market as well. we increased our share around 10 percent, this 10 percent increase should be reflected to whole market (10 percent/12 ) otherwise it should be defined as our growth will not specific effect on whole market size.
At the end he said "I can't say if we can acquire it", I thought we shouldst say that due to giving inconclusive statements. Shounldn't we just say "Based on these initial findings, I think you should ... "
Oh god this is awesome and thank u so much sir for this video . And I gained knowledge about how to approach a case and I liked the way he approached the case.
Apart from the English part I also noticed that Indians feel mostly comfortable with American and even to a large extent European culture - my Chinese friends at Uni do not. The cultural differences are quite a bit. Also the difference in learning - my Chinese friends are amazing at anything that involves learning book based. For example at my French class they were usually the best at grammar. But when it came to speaking I saw Indians confidently speaking even if they knew they had a horrible accent and or if they knew they were butchering the pronunciation.
In your calculation you are correct until getting 21.84 but you missed that this 21.84 is not out of 100 but of 180 (because pie has also grown by 80%) hence it should be divided by new market size (i.e. 180) to get final market share which would be around 12.13%
Wrong cause they didn't multiply times 1.8, as he said at the beginning, if you grow the same as the market your share doesn't change, so you only need to factor the changes with respect the market
Thanks for the real feel of the case interview. One doubt on the market share calculation, since the new percentage is 21.84%, and assume the rest does not change, should the new market share be calculated as 21.84 / (100 - 12 + 21.84) = 19.88%?
Very comprehensive approach to the case .. only contention I have is why did u compound the 30% and 40% growth. It would seem that both those percentages are from same base so adding them to overall 70% growth would make more sense... unless I am missing something
Hey Krutivas, I have assumed that we would sell the new product categories in the new channel as well, not just in the old channel, hence the compounding. I should've made this explicit for clarity, but the important thing is that if the interviewer had asked me about that, I would be able to justify. In case the interviewer had told me that they are NOT going to sell the new product categories in the new channel, then I'd recalculate and reach the new number. The key point, though, is that the difference would be small enough (12%), and the overall CONCLUSION of the case would still be the same. This is key to understand - the conclusion/recommendation is what drives the calculations and analyses, not the other way around.
I thought Julio asked a great question when he asked "Is customer loyalty a good thing or a bad thing for this acquisition" and I thought he implied, if my friend acquires the business and then changes the name or announces a new owner, will customers leave the business? But it seems Bruno just looked at what customer loyalty is in general and I felt like that was a missed opportunity. Do you agree?
You can, but: 1) Porter’s model just looks at industry PROFITABILITY (especially shifts in it), not size for instance. 2) The model is better used in terms of SHIFTS in profitability. For current profitability it’s better to simply get data. 3) Most candidates have no clue about how to use it in practice and start speaking with so much jargon and so little concern to what to do in practice and how to prioritize and test those hypotheses that they sounds like an academic and can’t move forward with the case. Because our point number 3, I wouldn’t recommend using that.
Hello guys. First of all, thank you for these more than helpful videos. Second, I'd like to know what you are doing now? since you both are not working at Bain and Mckinsey anymore.
Hey Rosane, we're working full time with Crafting Cases on helping candidates with case prep. We're mainly working on other content channels now and on creating/improving our courses (one of them is free, but it's as helpful/complete as a paid course, so I really recommend you start with that one).
This is such a great video. However, a quick question - Could this case be solved by doing Porter's 6 force industry attractiveness as it gives a fair idea on competition, supplier, buyer, complements and substitutes?
Porter's 5/6 forces are indicators of industry profitability. You could be pointed in the right direction but your structure probably wouldn't be complete.
Hey juan, would you share with us what specific things do you consider not important and that you would take out of your solution? I'd love to know that.
@@CraftingCases 2nd part of the video "Increasing sales" was alright and pretty well structured (1.-sell more of the same, or with higher prices, to existing costumers, 2.-sell different things to same costumers, 3.-sell same things to new costumers, or 4.- sell different things to new costumers) and how the consultant tapped into those ideas were creative and made sense, a bit to developed though considering he has no info whatsoever. 1st part "market attractiveness" was too developed in my opinon, he was only being asked for growth, margins (And didnt develop on that), size of the pie (And didnt develop on that), costumer base, competition, barriers of entry, differentiation oportunities, and perhaps if he new how to operate in it, he developed all of those subjects and more (leaving critical issues such as margins and pie size behind!) very deeply, with no relevant info whatseoever, and started proposing solutions "a priori" He could have tapped a bit more on the info the interviewer had, perhaps ask for leads on what were the critical issues and bring light to those, Instead he went micro and started developing on cross selling, ease to get traffic, costumer loyalty, being more efficient than the competition, all important things but kind of loosely linked to the question "is the market attractive" 3rd part was kind of a structured brainstorm with no regard of the financial position of the buyer, or stating that you should hold the investments accountable for the investments, or asking for the prefered channels of the clients, just spitting ideas, I'm not paying 300 USD an hour for that.
Hey juan, got it! That was me answering the framework in the video, by the way. A few points that I'd add: - Because this was a McKinsey-style case I developed my framework in a lot of detail. McKinsey typically likes candidates to do that in their interviews, and give you feedback of "lack of breadth" if you don't. - In my view, a market/industry that allow for more cross-selling, is easier to get traffic to its e-commerce properties and has customers that tend to be more loyal (such as the audio equipment industry) is more attractive than an industry that has little cross-selling opportunities, is harder to get traffic to and has customers that are not loyal (such as the mattresses industry). I accept if you disagree on that, but I'd stand firm on my point! - I have not developed margins and size of the pie indeed. The structure probably would've been better had I done that! On the spot, doing the framework, I thought knowing the numbers would be enough to assess if the market was attractive or not on those dimensions. I could easily see how it could be better with more detail there. I do think that an analysis that only focused on the quantitative aspects would fall short in helping our friend to make a decision on being in this market or not though. It would've been too shallow and not give any insight whatsoever on how to work on this market so it's actually attractive.
@@CraftingCases all valid points. The one thing I missed was asking what the client would see as attractive. You right out assumed it is earning money due to good margins and high growth (well that's so obvious who needs a consultant :). Perhaps your client thinks differently and wants to get into a market that has low or eroding margins, is highly competitive (this particular market probably is just that), and hard to differentiate as a single vendor. Perhaps the client likes a challenge? Because you did not ask that you jumped to a (your) conclusion and delivered text book answers. Ok probably that's what would get a candidate hired and why I wouldn't :) My answer to the first question would have been something like this: Look we can chit chat here as long as we like, I can tell you about all the text book aspects like market size, addressable market, margins, competitive situation, typical customer profiles (btw something you missed entirely IMO), seasonality and sales cycles (informs financing needs) etc. However, that's really just the boring stuff, just the numbers. I guess your friend could find out themselves, or go ask the local business association. To really provide value to your friend, I shall meet with him to understand his intention, his passion, what he really wants to do and why he got hooked on the idea to buy this business. After all it is this particular business that will make him happy with his investment or not - the market may be attractive or not in general terms, the real question probably is whether your friend can get this business to deliver whatever he thinks would make it an attractive opportunity. So unless I can meet with your friend I'm afraid I can't deliver good value for the money, and so I won't. Do you think we can arrange a meeting, when? I'm flexible, just let me know and I'll be there. Would that work for you? P.S. Yeah I know that would probably blow my opportunity to get the job. Not a problem I wouldn't want it :) Anyway, great channel, thanks for sharing.
Hey miraculixx, that’s certainly something that would be done in a real project (especially by partners), and certainly something that you could mention in an interview. Still, as you figured out yourself, you’d still need the more “technical/textbook” answer I gave in the video if you wanted the job (which is the purpose of this channel). Now, just to challenge you a bit... yes, who need a consultant to tell that a high growth, high margin business is attractive - agree with you on that. But if our friend wanted a declining, eroding market because he likes a challenge, he doesn’t need a consultant to help him find that either!
I got confused there too. This calculation assumed the 1.3 effect of new product is 1.3 no matter what other changes happen (even if the multiplied base is changing). It is mentioned at 22:33 why he compounds(multiply sequentially), because these new products will be applied to new marketplaces too, so the 1.3 effect applies to both new products in old market and new products in new market, not just the former. Additionally not mentioned in the video, they assumed that both 1.4x and 1.3x effects compound on top of the 80% growth in e-commerce of bednbath.
I have a question! 9:30 ish the question asked seems slightly odd to be asked. In what cases would customer loyalty be bad, or was Julio just trying to get an explanation out of Bruno? Thank you!
I believe he asked about customer loyalty in that specific market. Since Bruno's friend is going to be a new entrant in the bed&bath e-commerce market, if the customers are very loyal, it's going to be hard for him to acquire customers as a new player. Hence, in that case, a pretty high loyalty would not be good...
Hey Thomas, Bruno here... If you can do this type of multiplication even more efficiently, more power to you! Julio is really fast at it too, but I'll say it's not my forte (I'm much more of a conceptual thinker). Still, the way I did in the video is more than enough to get multiple offers at McKinsey, BCG, Bain, etc.
New subscriber here. I really enjoy this channel. I would appreciate if you’d give us a link of the PowerPoint presentation you are using for every video in the description. That would help a lot. Thanks.
Great video. One question: If the overall market grows by 80% and your company grows by 82%, aren't you really just growing your share by the small difference between the growth rates, instead of the full 82%?
Hi, I would like to start by saying how much I love these videos. I only have one question regarding the market share calculation. if we are selling other catergories of products( silverware, furniture, ect.), should we factor that in our market share calculation? aren't those sales considered part of another sector?
Hey Rishika, glad you liked the approach. I don't practice my math all too often as I don't have to go through interviews anymore ;) But anyway, I'll use the opportunity to dispel a myth: your math does not need to be fast - it needs to be efficient. Having few steps that are clear and easy to follow is more important than how many seconds or minutes it takes to solve the math. Anyway, thanks for watching!
The quickest way to learn to solve cases better is by taking our free course at www.craftingcases.com/freecourse. You'll learn the 6 Building Blocks to solve any case, learn a step-by-step process to solve each of them, and get tons of video practice drills to internalize the techniques.
Ink cartridges
One thing is learned is how deep the clarification process is before he even attempts to solve the case
Looking to start applying for consulting jobs and I'm glad I found this video. I interviewed at EY years ago and bombed the interview, mostly because I didn't point out information that I thought was completely obvious. For example, in this video, the first thing you say is "Can the business make money?" and my first thought is "Well duh, if you don't think the business can make money, why are we even here." I guess consulting interviews really want you to break down every tiny aspect of running a business. Definitely an important concept to start wrapping my head around. Thanks guys.
Great video guys, helped me out a lot to prepare. After 2 job interviews and a full assessment day with cases , i found out last week that i got the job! Well done! Thanks
Wow... Congrats
How did u start? Any tips?
He have not time for us now ... 🙃
@@i2ber357 hahaha!!!
W
How is it going? Please update! :)
I'm watching a video of a mock interview of someone else and my ass was still sweating
Lol
Relatable🙋🏻♂️
wear diaper in your turn xD
@@d.saptaparni adult diapers haha.
First Mock Video that feels real. All the other ones are rehearsed with the people coming with amazing financial ratios they learned about 20 minutes earlier! Thank you for making me less scared to do my interview on Friday :)
Hey Daniel, glad you liked it! We indeed hit record in the camera and did it in one go!
Good luck tomorrow, by the way! Let me know how it goes :)
Did you do well Daniel? Can you share some tips?
Got one tomorrow lol I thought I was past case interviews, but it's with an amazing firm.
hope you did well
This mock interview looks very real to me and thank u for making this video to let me know what is a good way to interact with the interviewer and to solve the case problem!!!
This format is "GOLD". This is so inspiring to see behind the scenes.
Very cool to see how Bruno interacted with the interviewer and worked his way through the case, great video!
Thank you Giulio, we'll make more like this one! Let me know if you have any other suggestions of videos we could make.
I stumbled on this video a few month ago and went through the prep material on your website. Got the job. You guys are so on point! Thanks for all your work!
I got my first case interview with BCG next Tuesday so living and breathing all the videos and this was great. Made it less nerve wracking for me.
Watch at least the Brainstorming module of our free course if you don’t have the time for the whole thing.
Most important module to not make the most common mistake that gets ppl rejected in their first rounds.
I watched the whole thing and will be going through your free course! :) cheers guys!
Great video. I would also add "Logistical dependencies" as well since deliveries will be dependent on third party companies such as UPS, FedEx, USPS, etc.
I agree with you.
@@dr.wezisunkutumd8745 logistical dependies is an operational constraint which can be solved, not really a big issue for someone delivering fabric items only
Congratulations guys. Incredibly helpful. But I think there is something that needs to be clarified. To the question asked in 21:30, I would aske if the increase in sales caused by those levers affected the other competitors or in the other hand if they are 100% new sales. Because this fact changes the result. In the case the increase of sales comes from the decrease of competitors sales, then the answer is correct, because the global market doesnt change. But if the market expands as a result of our new strategy, then the final market share is different. For example, if the Total market in year 1 is 100M, we got 12% of that (12M). With our new strategy, we increase that number to 21.84M (calculated as in the video), but the global market also increased, it passed from 100M to 100+21.84-12 = 109.84M. So our final Market share is 21.84/109.84 = 0.1988 = 19.88%
We could also calculate the final number in terms of the percentage of the new sales origin.
Please, note that the numbersI chose are just to make the calculus easier, but it is all about the percentages, you could try any number and the result will be the same.
Apart from that, great great video.
first of all,thank you for your video. I am not here because I want to interview for a consultant job,I am here to learn analyzing and presenting and I think I've learned a lot today. Thank you.
Thanks for uploading this. For some reason it's so god damn hard to find simple examples of question and answer for case study interviews. Instead it's all 8 hour-long seminars discussing theories and methodologies behind case study interviews. This is clear and concise and gives you a feeling for how to approach it.
For the analytical question - it would really help to have a display of the question on the screen for the audience, as I had a very hard time figuring out what Julio said even I increase my earphone volume (since he isn't speak directly to a microphone on him)
Yes. It is very difficult to understand Julio
This is a great example of what you are trying to present. Thank you for your effort in this.
Nice video. One thing though; the math is WRONG
-At 22:30 in the video you take the old marketshare and multiply by the company's increase in revenue to find the new marketshare: 12%*1.4*1.3 = 21.84%
The result seems reasonable and so you dont notice the mistake.
Assume instead that the old marketshare was something like 60%. If you assume the same increase in revenue and do the same calculation you get: 60%*1.4*1.3 = 109.2 %. Now the mistake becomes obvious since you cant have a marketshare over 100%.
-To make the calculation correct you need to factor in that your increase in revenue makes the market as a whole larger. To factor this in we need to divide by the new size of the market. The old market was 100%=1, where we had 12%=0.12 market share. The size of the new market is 0.88+0.12*1.4*1.3 so we must divide be this, doing so we get:
(12%*1.4*1.3)/(0.88+0.12*1.4*1.3) = 19.88% is the new marketshare.
And if the old marketshare was 60% the new one would be (60%*1.4*1.3)/(0.40+0.60*1.4*1.3) = 73.19% which is below 100%
Got my first interview (and case(s)) in two weeks. I'm going to watch as many of these as I can. I'm a little nervous as these videos/answers are amazing. Really hope I can get some good ideas and smash it out of the park
Jacob Robinson how did it go?
At 23:00, they should be using a geometric mean to calculate the growth of market share. It's not 12%*1.3*1.4. Instead it should be 12%*[(1.3*1.4))^(1/2)]-1. The impact of those 2 growth initiatives is happening in parallel, not one after the other.
Good video. A great example to candidates. You should always ask questions and ensure that you understand the problem at hand and focus on it. Show confidence, don’t be afraid and don’t bull shit.
Thank you very much! What I liked the most is how you divided the issue tree (as the business is and expand to other segments), it was a great idea!
Im totally setting up my own B2C towel business now !
I am interviewing with McKinsey this coming week. I sure hope I don’t get a demerit for using the word awesome (if a situation is awesome). It shows passion. Coming with 8 years consulting experience from the largest engineering consulting firm - our interview processes are quite different!
De longe vocês tem o melhor material para case interviews! Legal descobrir que são brasileiros! Abs
Great interview. I had a mock interview with McKinsey and have a formal case interview today (both over the phone). The interviewer in the mock interview advised me to only take 1.5 mins, possibly max 2 to come up with my structure. He said he'd prompt me for an answer at the 2 min mark, and in fact I slid in just shy of that, which he mentioned as well. In the last maybe 20 seconds, I had come up with a bucket that was very important to the structure, so he did say that my taking this time to add it in was well-used.
The most interesting part is that Bruno in this video is similar to Bruno Fernandes in Man United
looks more like bernardo silva :D
WTF!! 😂
looks more like Marlon Teixeira (google him)
I think Julio cross questioned how customer loyalty would affect attractiveness of the market because if customer loyalty was high, it would be harder to pull customers away from existing businesses and hence harder to grow your customer base
Yeah I thought so too. It will depend on how saturated the market is and whether there is enough differentiation to target a different demographic.
Damn, sounds like a real consultant - no experience of doing, only experience of advising. If interviews are like that, probably MBB and big4 advisory departments are useless.
Thank you, guys! Nice case, slightly different from the normal acquisition cases. And I did this after your fundamentals course and did very similar, in the brainstorm it was nice to see that i was able to capture the mkt place idea !
Obrigado pela ajuda.
Hey Matheus, very glad to hear that you got to a similar type of answer after going through our free course -- seems like the course is doing what it's supposed to do :)
I'd love to hear more about what you thought of the course.
What do you mean in the last sentence? Please don’t be rude and speak English. Go to talk Spanish to the Spanish videos. Thanks.
@@IntlDebtLawyers Thats not Spanish, its Portuguese for "Thanks for your help", he is just trying to be nice, talking un their native language. You are just as ignorant like stupid.
This case is oddly unique making it hard becasue the client wants to "buy himself into enterpreneurship". A standard framework for Mergers and Acquisition wouldn't match in the first half of the case. Usually, it is very often a company that's looking for help asking for choices on how to keep themselves profitable, by for instance buying merging/acquiring another company or it's a company that's directly asking if they should merge/acquire with company X Y Z. I was confused at 10:28 suddenly that client what's to acquire the company and don't even know exact company in question. Their revenues, their competition etc. But it seems like it can happen that your interviewer will suddenly fast forward so that we are not even required to decide yes?
This one here is different and I can totally understand why it is hard. Thanks guys very much for the video. Great job!
Interviewers do fast forward sometimes. Easy way for them to test different skills.
Awesome that you made the connection between this case and "regular" M&A cases too! Specific cases like this one are getting more and more common because they make it ridiculously easy for interviewers to see who's trying to force fit frameworks vs. who's actually thinking about the problem.
@@CraftingCases Thanks a lot for the advice!
Attractivness is always personal, as it depends on one's rational opportunity cost ($1.000.000 of annual net income from bed & bath business might be attractive for me, but not for someone who is doing $2.000.000 let's say on Wall Street) & emotional preferences. I would probably emphasize it in the very begining in order to make case solving more comprehensive.
In addition, I think 2nd and 3rd points are actually subcomponents of the 1st one. Generally, I think there should be two main points - How much money he can make now? And how much money he can make in the future? And the rest parameters are subpoints, except for the 4th point, which can be found out only by giving the above information to that person who asked this question and asking him whether it is attractive for him as you cannot assess someone's opportunity cost and emotional preferences.
Incredibly good work, especially your 5 ways to be MECE tips. resolved all my already done cases with those powerful tools in mind, and it helps alot to bring a decent structure to the case solving! :) Keep up the good work!
Thanks guys!! Demolished the case now going for the 2nd
juan manuel santa maria How did it go mate ?
@@user-nt3uh8ru6s not so well it seems
Nk lmao.
@@nostradamusus 😂😂😂😂
@@Lbcyoung 😂😂😂😂😂😂
Hey thanks for doing this, I got the job!
Why you guys stopped uploading new videos? Ur case studies are amongst the best I've seen on utube fr 🙏🏽
Focusing on our courses for now.
There’s tonnes of other examples in our free course - it’s our best content, check it out.
It's a great case interview. An important question: How did he come up with such detailed relevant questions under three minutes?
Go through our free course and you'll find out :) (craftingcases.com/freecourse)
Really like the content. If possible please try to keep the mic as close as possible. Just a suggestion. Recently came across your channel. Really love the work. Cheers.
The customer loyalty response at 10:30 seemed sub par. Full disclaimer: I haven't yet watched past that. Customer loyalty is primarily a function of the customer's own behavior and secondly a function of how you treat them (customer service, price and product differentiation, etc).
We can assume customers are either "recurring" (have purchased home goods items before) or "non-recurring" (new customers breaching the marketplace) to the broader market .If we assume that customers are inherently loyal and sticky, then it is a problem because that would make it increasingly more difficult to capture already "recurring" customers (they may be loyal to a different company). If we assume the bulk of the customer pool is "non-recurring" then that means you'll be able to capture them more easily and keep them on with brand loyalty, but it will be more difficult to cross sell to them since they are new to the market altogether.
Great video Bruno and Julio, helps me a lot to prepare.
Great work Bruno and Julio! But I have a question on the "Can he hold a competitive advantage" criteria and the 3 points you mentioned.
Why would it be important to ask how he can differentiate, what ways can he be more efficient or what are the barriers to entry when the question is "Is the market attractive"? Aren't you answering a different question of "how does he become successful in this business"?
Why would there be barriers to entry when the business he is trying to purchase already exists?
I came up with a few other points under the "Competition" criteria. Can you let me know how these look?
- Who are the other players in this Bed & Bath ECommerce space and what are their market shares?
- Has anything changed recently in the market? Have their been any acquisitions, new product lines?
- Is there innovation in the space and is the technology used by competitors the latest and greatest or is it quite archaic?
Also, isn't it important to mention "Risks" as one of the 4 factors in evaluating if the market is attractive?
Risks include regulation, health concerns (allergies), geopolitics
So, some markets allow for more competitive advantages than others, and being in a market that allows you to have those is one way to know if the industry is attractive. The three examples that I mentioned (opportunity for differentiation, for increasing efficiency and barriers to entry) are the main ones I thought when doing the interview.
Btw, barriers to entry mean it's tough to enter and scale, not that it's impossible. Businesses exist in all industries with barriers to entry, of course. I recommend you read Porter's article/book on the topic.
As for your points, they look fine if you can back them up (aka: explain why each helps answer the question).
Regarding the risks you mentioned, they don't look relevant to me. You're selling towels and bed sheets, so regulation/geopolitics doesn't apply. Health concerns could apply, but it's not a big risk and you have control of the product, so I wouldn't say it affects industry attractiveness.
Why you multiply with 1.4 and 1.3 ? then it basically means that we first did the marketplace move and get the effect than we execute complementary item move.
When the point about the branding of website is raised & he said it's not really measurable, the thing that pops in my mind - A/B testing.
I think that is one very good way of measuring the effectiveness of website branding / changing the look of a website & if it is actually working in driving more traffic / influencing sales.
I agree with rest of all the points that he makes :)
Hey Sagnik, that's a great point but I disagree.
I agree you can A/B test the WEBDESIGN, but branding is something that runs much deeper.
Take Coca Cola, for example - their branding is on their packaging, it's on decades of TV commercials and jingles associating them with family and joy, and it's on the fact that you KNOW you'll find it everywhere (which has dramatic impact in their distribution and bottling strategy).
Or take Amazon, as we're talking e-commerce here. Their branding relates to how you'll find EVERYTHING for CHEAP and get it delivered QUICKLY. A lot of companies claim that in their website, only Amazon delivers it. Other companies don't deliver on it because it took Amazon years to develop the IT systems and logistical infrastructure to be able to do that. Can't A/B test it.
And if you're looking for something simpler, I could mention Lululemon. It took them years and years of clothing R&D to be able to say "Breathe easy" on their website and be credible.
So yes, you could A/B test the design and the copy of the website. But that's just the tip of the iceberg of branding.
Nice poin. I agree. But just one last point / a query rather. For a relatively new start-up, isn't Branding mostly synonymous to website design? Suppose they are at a point where they are using single channel marketing strategy - their website. Because I read somewhere in the initial days, that's how sites like Amazon perfected their branding... They would A/B test a simple thing like add to cart / buy now button
And that's how with multiple successful iterations of things that worked, did they come up with their current version.
P.S - I am just stepping into this world of consulting & these guiding comments from veterans like you is appreciated 😀
Chipping in here- great, authentic interview video! Brand value can be approximated by marketing research tools such as conjoint analysis. Example could be quantifying value perception on exact same shoe with one being Nike and the other off brand. Multiple brand comps can tease out relative brand perception and brand contribution as relevant to the sample surveyed. Expect different customer segments to value brand differently. 2 cents.
Great Video!
Btw where did the marketplace effect (1.4) and new product categories effect (1.3) come from?
the percentages of growth given by the interviewer
I also had a problem with this. I expected 0.4, 0.3. I wish this could be clarified
Amazing illustration, I have one question - What if you were asked to choose between "Business as usual" or "Change the business". i.e. choose one branch of your issue tree at the second level. How would you go about that? The reason i ask is i know a lot of hard-ass interviewers don't even give an inch so how to deal with that?
Hey Siddharth,
If the interviewer asks this, one thing to be aware is that they’re not looking for “one right answer”. Instead, they’re looking for (1) a well-reasoned hypothesis, and/or (2) a way to test this hypothesis.
The way I’d answer this would be to prioritize “Business as usual” with the hypothesis that it’s easier AND that there’s more opportunity in tweaking the business rather than changing its direction. Then I’d say that to test that I’d compare major e-commerce metrics of this business against benchmarks (Customer Acquisition Costs, Conversion Rates, etc).
They may have the benchmarks and they may not have them. They may agree with me on how I prioritized or not. Regardless, by saying those things I give them what they want: a well-reasoned hypothesis and a way to test it.
great video, but i wish there was less echo in the audio
For increase in sales, also identifying pain points for the existing customers and making the process more seemless for existing customers will also increase new customers
You guys remind me of 2 football players, Bernardo Silva and Alisson Becker.
Hi,
I just wanted to ask why we are not also multiplying by 1.8, considering that the industry is expected to grow by 80% in the next two years.
12% * 1.4 * 1.3 * 1.8 = 39.3%
Thank you for the insightful video.
Se eu entendi esse sotaque certo, acho que vocês são brasileiros. Obrigada pela ajuda! :)
One of the best resources out there. Thank you so much!
So glad you like it Palash!
such a great educational video to practice case interviews. tough
I think the way he did the math took more time than doing the actual multiplications. Great Video BTW
Glad you liked it!
About the multiplications... They’re not hiring who multiplies the fastest. They’re hiring who can show a broad range of skills in the alloted timeframe :)
Great video! But please could you improve the sound quality for upcoming videos. During the case interview it was at times very difficult to understand acoustically. That would be amazing! Thanks.
Thanks to this video, I went from AC straight to Sr. Partner. 👌
nice one. congrats ! usually do they hire ppl comes from an education background that is not super attractive compares to the ones who has a MBA for example ?
Thank you so much for uploading! Great realistic introduction to case interviews, definitely interesting stuff.
it is advised to add a "next step" part to your final recommendation. in this case I kinda don't know what next steps should we take
Augmented Reality and Unorthodox marketing campaigns can also be a few possible solutions. I think he already mentioned it but collaborations with furniture stores is a really prospective solution.
one quick question. I'm curious in "market share question part" if I assume the total market worth 100B our market share will be 12B. and others are 88 B. our share grow to 12*1.3*1.4 =~ 22B. while assume others competitor remain the same at 88B. (neglect 80% growth which affect both of our company and the competitors) so our share should be 22/(22+88)*100 which is 20%. am i missing something??
You should not sum 22 with 88 for the future total market, as the market grows only 8% in total (If our firm grew more than that, some other firm grew less to account for an average 8%), you should instead use 100. Our share should be 12*1,4*1,3*1,08/(100)*1,08 = 12*1,4*1,3/100 = 22/100
Hi! Great video! I wanted to ask about the time Bruno took upfront to structure. He took 3min 6sec, but I’ve heard 60-90sec is the rule. Could you shed some light on this please?
Great video of how a simple question yet very important when you start to make a business be answered in structured and concrete way.
I am new to this. I wonder if this analysis is similar with product-market fit analysis?
Hey Yusuf, it's slightly different. Product-market fit analyses if the product fits the market (duh). This one analyses if the market is attractive (i.e. if it's a market you'd want to be in, regardless of if your product fits it or not).
Regarding the market share projection (the analytical part), it isn't correct to say that the expected increase in sales translates directly into a corresponding increase in market share, since the total sales of the industry would also grow... Thus, the future market share will be sligthly less than the calculated value - right?
If the market size is also growing (80% in two years time), then we can’t simply do 12%*1.4*1.3 to get the future market size (here, you are assuming that the market size did not change which is not the case) plus, didn’t the interviewer ask to get the new market share for 2 years from now???
Regarding the math at the end.
Is it correct to assume that the multiplier only hits after the second year market share? Why would we only go about implementing the two levers at the end of the two years?
So in my opinion, the 1,82 should apply to the initial sales at the beginning of the two year span, leading to...
Company growth:
Current sales: x
1,4*1,3*x+0,8*x=2,62x
Market growth:
Current sales=y
1,8*y=1,8y
New market share
2,62x/1,8y
X/y=12%
2,62/1,8*12%
1,45*12%=17,46%
Would this also be correct? In the end it depends on the assumptions regarding to when the multiplier applies.
Best regards, very helpful video!
Hey Christian,
It would definitely take some time to implement the two changes (new channel and new product categories) after our friend acquired the company. How long? Is it 2 whole years? I don't know - and in a real project, you'd probably estimate that for each action as well, and apply the growth accordingly.
You'd certainly need a spreadsheet to do that, so I wouldn't worry about it in a case interview, which means that there is no ONE right and wrong timing to implement the change. I just picked 2 years because it felt reasonable and it was easier to work with the numbers.
If you want to pick something else, make sure you justify to the interviewer. I think you'd be challenged by most interviewers if you assumed implementation of those two changes was instant, but somewhere in between would probably be fine.
Now, one interesting thing about your calculations is that it doesn't consider that the new channel and the new product categories are gonna grow at all. I think this is the key mistake I'd be concerned with. I don't know if the new channel and the new product categories are gonna grow at 80%, more than 80% or less than 80%, but I do know it's unlikely these will remain stable. I'd have done a better job in the case had I asked that, but you can't just ignore that markets and channels grow.
Hope this helped!
Bruno
Great job! Would be helpful to know how you go about finding the answers to those questions
Have you thought about selling your company and buying bitcoin
This aged well
Regarding the sales increase: Can you really just assume that the two increases (marketplace and complementary products) are compounding? Or does this depend on how the analyses was performed? Perhaps the complementary products won't be recommended in the same way on amazon marketplace, so the 30% growth might not apply to the sales through amazon marketplace
At 17:25 there is a pop up which says Bruno missed percentage of visitors who purchase. But at that point he was talking about acquiring new customers and not increasing sales / revenue per customer within the existing customer group (which were his other 2 points) . Am I missing something?
Very good video. Currently binge watching all your videos - so please keep them coming :)
One question: Given that we assumed to grow in proportion with the market, how would you change your calculation in the analysis if we grew more, or less that the overall market?
Hey Jeppe,
It depends on how the data is given. Did they give a dollar amount that we're gonna grow on top of the market? Or a % of revenues per year faster than the market? Or percentage points of market share faster?
If the first, we'd need to calculate revenue growth for us and dollar growth for market and divide the two (there are some shortcuts depending on the specific numbers)
If the second, you can add one multiplication representing that extra revenue growth. Example: if we grow 5% more than the market in the two years, we could multiply the final result by 1.05. (So it'd be current market share *1.4*1.3*1.05).
If the third, you can just add the p.p increase to the final market share metric.
Try these out and see if it makes sense to you. One challenge with creating these equations is that the numbers never come your way in the same format. You need to learn to be flexible and the only way to do that is to practice with different parameters.
Binge watching as I have an interview tomorrow....... Pray for me
Really helpful and professional interview, one question I have is - There was no stating of a hypothesis at the start. Is this not essential to show to an interviewer that you are taking a hypothesis driven approach not a framework driven approach? Is a hypothesis a key part of demonstrating you have clear problem structure. Is there any point of an issue tree if you have no hypothesis to test it with ?
Khaled Oozeer I'm guessing it's because he was trying to determine whether the market is attractive (pretty general question) and there are many factors that would need to be tested, not one specific thing like you would hypothesise initially in a profitability problem (where there would be 1-2 things you need to isolate to get to the root of the problem)
And also the increase in our sales will also increase the market as well. we increased our share around 10 percent, this 10 percent increase should be reflected to whole market (10 percent/12 ) otherwise it should be defined as our growth will not specific effect on whole market size.
At the end he said "I can't say if we can acquire it", I thought we shouldst say that due to giving inconclusive statements. Shounldn't we just say "Based on these initial findings, I think you should ... "
Oh god this is awesome and thank u so much sir for this video . And I gained knowledge about how to approach a case and I liked the way he approached the case.
Apart from the English part I also noticed that Indians feel mostly comfortable with American and even to a large extent European culture - my Chinese friends at Uni do not. The cultural differences are quite a bit.
Also the difference in learning - my Chinese friends are amazing at anything that involves learning book based. For example at my French class they were usually the best at grammar. But when it came to speaking I saw Indians confidently speaking even if they knew they had a horrible accent and or if they knew they were butchering the pronunciation.
Thanks, great video. But would this framework stand a Toothbrush Test?
In your calculation you are correct until getting 21.84 but you missed that this 21.84 is not out of 100 but of 180 (because pie has also grown by 80%) hence it should be divided by new market size (i.e. 180) to get final market share which would be around 12.13%
Wrong cause they didn't multiply times 1.8, as he said at the beginning, if you grow the same as the market your share doesn't change, so you only need to factor the changes with respect the market
Costumer loyalty is good if the market is growing and there aren't any gatekeepers, check the single homing effect in digital markets.
Thanks for the real feel of the case interview. One doubt on the market share calculation, since the new percentage is 21.84%, and assume the rest does not change, should the new market share be calculated as 21.84 / (100 - 12 + 21.84) = 19.88%?
I think you are right. I was thinking the same.
You are right. What they did was wrong
Very comprehensive approach to the case .. only contention I have is why did u compound the 30% and 40% growth. It would seem that both those percentages are from same base so adding them to overall 70% growth would make more sense... unless I am missing something
Hey Krutivas, I have assumed that we would sell the new product categories in the new channel as well, not just in the old channel, hence the compounding. I should've made this explicit for clarity, but the important thing is that if the interviewer had asked me about that, I would be able to justify.
In case the interviewer had told me that they are NOT going to sell the new product categories in the new channel, then I'd recalculate and reach the new number. The key point, though, is that the difference would be small enough (12%), and the overall CONCLUSION of the case would still be the same. This is key to understand - the conclusion/recommendation is what drives the calculations and analyses, not the other way around.
I have an industry analysis case study for a private equity internship and I'm so nervous
Hey there! How did you go? Could you tell me what sort of resources you used to prepare for the PE application?
First question is wether the logistics division is owned or third party.
Third party is profitable
Great analysis. Would you not want to start with assessing the capital at hand first?
No, because they specifically want to know if the market is attractive
@@CraftingCases Great Feedback, Thank you.
What else should have been asked/checked if the client wanted a recommendation whether or not they should enter the market ?
Mainly things related to competitive advantage.
I thought Julio asked a great question when he asked "Is customer loyalty a good thing or a bad thing for this acquisition" and I thought he implied, if my friend acquires the business and then changes the name or announces a new owner, will customers leave the business?
But it seems Bruno just looked at what customer loyalty is in general and I felt like that was a missed opportunity. Do you agree?
Why would customers know that the business changed owners? And why would they really care if the loyalty is to the brand?
The interviewee should have asked what exactly increase in sales is? Is it 10,20 or 50% and is it short or long term increase they are looking for?
Isn't there something off in New Market share calculation? The market grew by 80% so shouldn't be 21/180
You should put out more videos.
Hello Julio and Bruno. Can we use Porter's Five Forces Model to check Industry Attractiveness?
You can, but:
1) Porter’s model just looks at industry PROFITABILITY (especially shifts in it), not size for instance.
2) The model is better used in terms of SHIFTS in profitability. For current profitability it’s better to simply get data.
3) Most candidates have no clue about how to use it in practice and start speaking with so much jargon and so little concern to what to do in practice and how to prioritize and test those hypotheses that they sounds like an academic and can’t move forward with the case.
Because our point number 3, I wouldn’t recommend using that.
Hello guys. First of all, thank you for these more than helpful videos. Second, I'd like to know what you are doing now? since you both are not working at Bain and Mckinsey anymore.
Hey Rosane, we're working full time with Crafting Cases on helping candidates with case prep. We're mainly working on other content channels now and on creating/improving our courses (one of them is free, but it's as helpful/complete as a paid course, so I really recommend you start with that one).
This is such a great video. However, a quick question -
Could this case be solved by doing Porter's 6 force industry attractiveness as it gives a fair idea on competition, supplier, buyer, complements and substitutes?
Porter's 5/6 forces are indicators of industry profitability. You could be pointed in the right direction but your structure probably wouldn't be complete.
Where did her get 1.3 and 1.4 as multipliers? Did he choose his numbers or are those known multipliers?
This is boiling the ocean taken to the extreme.
Hey juan, would you share with us what specific things do you consider not important and that you would take out of your solution? I'd love to know that.
@@CraftingCases 2nd part of the video "Increasing sales" was alright and pretty well structured (1.-sell more of the same, or with higher prices, to existing costumers, 2.-sell different things to same costumers, 3.-sell same things to new costumers, or 4.- sell different things to new costumers) and how the consultant tapped into those ideas were creative and made sense, a bit to developed though considering he has no info whatsoever.
1st part "market attractiveness" was too developed in my opinon, he was only being asked for growth, margins (And didnt develop on that), size of the pie (And didnt develop on that), costumer base, competition, barriers of entry, differentiation oportunities, and perhaps if he new how to operate in it, he developed all of those subjects and more (leaving critical issues such as margins and pie size behind!) very deeply, with no relevant info whatseoever, and started proposing solutions "a priori"
He could have tapped a bit more on the info the interviewer had, perhaps ask for leads on what were the critical issues and bring light to those, Instead he went micro and started developing on cross selling, ease to get traffic, costumer loyalty, being more efficient than the competition, all important things but kind of loosely linked to the question "is the market attractive"
3rd part was kind of a structured brainstorm with no regard of the financial position of the buyer, or stating that you should hold the investments accountable for the investments, or asking for the prefered channels of the clients, just spitting ideas, I'm not paying 300 USD an hour for that.
Hey juan, got it! That was me answering the framework in the video, by the way.
A few points that I'd add:
- Because this was a McKinsey-style case I developed my framework in a lot of detail. McKinsey typically likes candidates to do that in their interviews, and give you feedback of "lack of breadth" if you don't.
- In my view, a market/industry that allow for more cross-selling, is easier to get traffic to its e-commerce properties and has customers that tend to be more loyal (such as the audio equipment industry) is more attractive than an industry that has little cross-selling opportunities, is harder to get traffic to and has customers that are not loyal (such as the mattresses industry). I accept if you disagree on that, but I'd stand firm on my point!
- I have not developed margins and size of the pie indeed. The structure probably would've been better had I done that! On the spot, doing the framework, I thought knowing the numbers would be enough to assess if the market was attractive or not on those dimensions. I could easily see how it could be better with more detail there.
I do think that an analysis that only focused on the quantitative aspects would fall short in helping our friend to make a decision on being in this market or not though. It would've been too shallow and not give any insight whatsoever on how to work on this market so it's actually attractive.
@@CraftingCases all valid points. The one thing I missed was asking what the client would see as attractive. You right out assumed it is earning money due to good margins and high growth (well that's so obvious who needs a consultant :). Perhaps your client thinks differently and wants to get into a market that has low or eroding margins, is highly competitive (this particular market probably is just that), and hard to differentiate as a single vendor. Perhaps the client likes a challenge? Because you did not ask that you jumped to a (your) conclusion and delivered text book answers. Ok probably that's what would get a candidate hired and why I wouldn't :) My answer to the first question would have been something like this: Look we can chit chat here as long as we like, I can tell you about all the text book aspects like market size, addressable market, margins, competitive situation, typical customer profiles (btw something you missed entirely IMO), seasonality and sales cycles (informs financing needs) etc. However, that's really just the boring stuff, just the numbers. I guess your friend could find out themselves, or go ask the local business association. To really provide value to your friend, I shall meet with him to understand his intention, his passion, what he really wants to do and why he got hooked on the idea to buy this business. After all it is this particular business that will make him happy with his investment or not - the market may be attractive or not in general terms, the real question probably is whether your friend can get this business to deliver whatever he thinks would make it an attractive opportunity. So unless I can meet with your friend I'm afraid I can't deliver good value for the money, and so I won't. Do you think we can arrange a meeting, when? I'm flexible, just let me know and I'll be there. Would that work for you?
P.S. Yeah I know that would probably blow my opportunity to get the job. Not a problem I wouldn't want it :) Anyway, great channel, thanks for sharing.
Hey miraculixx, that’s certainly something that would be done in a real project (especially by partners), and certainly something that you could mention in an interview.
Still, as you figured out yourself, you’d still need the more “technical/textbook” answer I gave in the video if you wanted the job (which is the purpose of this channel).
Now, just to challenge you a bit... yes, who need a consultant to tell that a high growth, high margin business is attractive - agree with you on that. But if our friend wanted a declining, eroding market because he likes a challenge, he doesn’t need a consultant to help him find that either!
Thanks! Just to clarify what the question is asking, why did we calculate the growth with 12*1.4*1.3 and not 12*1.7?
I got confused there too. This calculation assumed the 1.3 effect of new product is 1.3 no matter what other changes happen (even if the multiplied base is changing). It is mentioned at 22:33 why he compounds(multiply sequentially), because these new products will be applied to new marketplaces too, so the 1.3 effect applies to both new products in old market and new products in new market, not just the former.
Additionally not mentioned in the video, they assumed that both 1.4x and 1.3x effects compound on top of the 80% growth in e-commerce of bednbath.
I have a question! 9:30 ish the question asked seems slightly odd to be asked. In what cases would customer loyalty be bad, or was Julio just trying to get an explanation out of Bruno? Thank you!
I believe he asked about customer loyalty in that specific market. Since Bruno's friend is going to be a new entrant in the bed&bath e-commerce market, if the customers are very loyal, it's going to be hard for him to acquire customers as a new player. Hence, in that case, a pretty high loyalty would not be good...
lol @ them doing some basic multiplication at 23:45 Protip: break it down into (1 + 0.4) * (1 + 0.3) = 1 + 0.4 + 0.3 + 0.3 * 0.4 = 1.7 + 0.12 = 1.82.
Hey Thomas, Bruno here...
If you can do this type of multiplication even more efficiently, more power to you! Julio is really fast at it too, but I'll say it's not my forte (I'm much more of a conceptual thinker).
Still, the way I did in the video is more than enough to get multiple offers at McKinsey, BCG, Bain, etc.
CraftingCases I’m the same Bruno I can do numbers but rather not lol
New subscriber here. I really enjoy this channel. I would appreciate if you’d give us a link of the PowerPoint presentation you are using for every video in the description. That would help a lot. Thanks.
true. maybe can suggest them and have it write down in the website mailbox ? not sure if they would give out though but hope so
Great video. One question: If the overall market grows by 80% and your company grows by 82%, aren't you really just growing your share by the small difference between the growth rates, instead of the full 82%?
The 82% is on top of the 80% - I just calculated the delta.
Hi, I would like to start by saying how much I love these videos. I only have one question regarding the market share calculation. if we are selling other catergories of products( silverware, furniture, ect.), should we factor that in our market share calculation? aren't those sales considered part of another sector?
Hi there. I had the same concerns. Neglecting the 80% denotes that you aren't affected by the organic market growth
Such a refreshing and comprehensive take on a normal market entry problem!..but his maths is a bit slow
Hey Rishika, glad you liked the approach.
I don't practice my math all too often as I don't have to go through interviews anymore ;)
But anyway, I'll use the opportunity to dispel a myth: your math does not need to be fast - it needs to be efficient. Having few steps that are clear and easy to follow is more important than how many seconds or minutes it takes to solve the math.
Anyway, thanks for watching!
@@CraftingCases yes we can increase efficiency by using fractions and separating out zeroes by raising them to powers of 10
That's true! Great job.