IITB Case Workshop Series

Session 1 - Profitability
Aviral Bhatnagar (Monitor Deloitte)
Ketav Mehta (McKinsey & Company)

Session Overview
1. What is Management Consulting?
2. Case Interviews: Introduction and Approach
3. Profitability Introduction and Framework
4. Profitability Mock Case
5. Profitability Audience Case

What is Management Consulting?

Management consulting is done to help organizations improve their
performance primarily through the analysis of existing organizational
problems and the development of plans for improvement. Organizations
may draw upon the services of management consultants for a number of
reasons, including gaining external advice and access to the consultants'
specialised expertise.

Management Consulting is perceived to be a highly exciting and challenging

job profile. With exposure to various sectors and businesses on a regular
basis, management consulting is a sought after field to work in.

Firms recruiting at IIT Bombay such as AT Kearney, Bain & Co, Booz and Co.,
McKinsey & Co., Monitor Deloitte, PWC Diamond and The Boston
Consulting Group (BCG) are all Management Consulting firms

Case Interviews: Introduction

Management Consulting firms recruiting at IIT Bombay typically utilize the
case interview process to evaluate and judge a candidate.

A case interview in simple terms is one in which the candidate is given a

question, situation, problem or challenge and asked to resolve the situation.
The case problem is almost always a business situation or a business case,
sometimes drawn from the interviewers professional experience.

Sometimes, the cases that are asked are related to some point in the
candidates resume. So it would be a good idea to practice a few cases based
on your projects, internships and even extra-curricular activities (Yes, even
extra-currics, a candidate with a black belt in karate was asked to estimate
the karate market in India in one of his interviews!)

Case Interviews: Introduction

After the candidate is given information about the case, the candidate is
expected to ask the interviewer logical and sequential questions that will
enable the candidate to understand the situation, probe deeper into
relevant areas, gather pertinent information and arrive at a solution or
recommendation for the question or situation at hand.

This form of interviewing lasts typically for 25 minutes, and are meant to
judge a candidates structured thought process, analytical skills, logical
reasoning and the ability to think on his/her feet. This is a close simulation of
regular cases encountered by professionals working at management
consulting firms, and therefore these skills are very necessary to do well at
these firms.

Interviews at IIT Bombay

Cases in undergraduate universities are generally restricted to profitability, growth,

market entry, product launch and pricing. Cases outside these types are almost
never asked and we advise you not to practice them. Guesstimates are another
common element of case interviews.
Guesstimates, as the name suggests, is an estimate made without sufficient data.
Questions can vary from estimating market size of some product to the number of
auto rickshaws entering the IIT campus in a day. The candidate is expected to not
just come up with a logical structure/framework to solve the question, but also use
reasonable assumptions to come up with the right numbers.
Guesstimates can either be asked standalone, or in the process of solving a case.
They test the candidates comfort with numbers and quick calculations, structured
thinking and creativity (in terms of coming up with a non-conventional approach to
overcome lack of data).

Interviews at IIT Bombay

Case interviews are usually preceded by a few HR and resume-based
questions. The most common question is the ubiquitous Tell me about
yourself. The interviewer will either allow you to complete the answer, or
stop you somewhere in the middle and ask questions about some point he
finds interesting in the answer.

Other common questions are Why do you want to join Management

Consulting and Tell me about your most significant achievement in IIT. But
questions vary significantly from interviewer to interviewer and can even go
the extent of giving the candidate real-life situations and asking how the
candidate will approach those.

Case Interviews: Approach

Lets understand the typical approach used to solve a case. This will be done
through the an example

The interviewer generally presents a business case in about 1-2 lines. It may or
may not be supported with data/graphs/tables. In almost all the cases, the
interviewer will never disclose all the data about the case and will only tell it to the
candidate if he asks the right questions. For example :

Our client is a chemical manufacturer and is facing declining profits. The

client has approached you for suggestions. What will you recommend?

Case Interviews: Approach

Introduction (5 minutes):

Paraphrasing the question

Clarifying questions
Background questions
Break to collect your thoughts
Breaking Down the Case (15 minutes)

Case questions
Concluding the case (2 minutes)

Summarize the case

Recommendations

Profitability - Introduction
Topics covered within this framework:

Profitability
Growth/Revenue
Cost cutting
Company turnaround
Our client is a major retailer in clothing and household products. Our client has
been experiencing sluggish growth and declining profits. Our client has 15
stores in malls in metros and suburbs. What do you do?

Profitability Introduction and Framework

Profitability

Revenues

Costs

Costs

Costs

Cost per unit

Value Chain

No. of units
(Sales-Production
mismatch)

Costs - Value Chain

Value Chain

Raw
Materials

Car
Manufacturer

Tyres,
Engine,
Electronic
systems

Manufact
uring
Factory,
Labour

Transport

Inventory

Factory to
Distributor:
Trucks, Drivers,
Tax

Showroom
cost

Distributi
on
Marketing,
Sales, Agent
commissions

Costs Types of Costs

Fixed Costs and Variable Costs
Grocery Store

Fixed Costs Land, Salaries/Wages, Power, Marketing

Variable Costs Purchase cost of products displayed

Revenues
Revenues
Revenue per
customer
Basket Size

Price

No. of
customers

Revenues No. of Customers

No. of customers

Industry Wide

Company Specific

Internal

Specific Store/
Distribution
Channel

External

Revenues Internal
Internal

Supply

Demand

Value Chain
4 Ps

Product

Price

Placement
(Distribution
Channels)

Promotions

Revenues - External
External

Competition

Substitutes

Externalities

Profitability

Revenues

No. of customers

Industry Wide

Costs

Basket Size
(No. of products
purchased)

Price

Cost per unit

No. of units
(Sales-Production
mismatch)

Specific Store/
Distribution
Channel

Company Specific

Value Chain

Internal

Supply

External

Demand

Competition

Substitutes

Externalities

Value Chain

Raw
Materials

Value Chain
4 Ps

Product

Price

Placement
(Distribution
Channels)

Promotions

Manufact
uring

Fixed Costs

Transport

Inventory

Variable Costs

Distributi
on

Profitability Audience Case

Our client is the Powai store of McDonalds for the past 2

years, strong growth and profits. In the past 6 months,
however, they have started facing losses. What do they do?