Consulting Interview Questions (also known as “case interview” questions) vary significantly from traditional Job interview questions. In a normal or behavioral interview, the Job interviewer would ask questions that are likely to start with “tell me about a time.” An instance is: “Tell me about a time you had a conflict with a team member and steps you took to resolve the conflict.”
Consulting interview questions, in contrast, start by putting you in a corporate or business scenario. They often start with “our client.” For instance: “We have a client who is a $2B office equipment distributor whose revenues have plummeted in the last 4 years. What do you advise them to do?”
When answering consulting interview questions, you are supposed to draw from your experience. Your goal is not to draw from your background, experience, or opinions. When answering consulting interview questions, you would be engaged in an intelligent interactive problem-solving discussion in order to provide a data-driven suggestion or solution to the question being handled.
You are sure to perform better during a consulting interview by possessing an upfront glance of what kind of questions may be thrown at you. Find below four types of questions and a few guidelines on areas that should be explored within each:
- Growth
- Profitability
- Pricing
- New product
1) Growth
Cases on Growth are centred on a company getting bigger—traditionally with regards to dollars of income, but the rating might also be number of clients or market share. For instance:
- Our client has promised Wall Street 5% income growth every year over the period of the next ten years. We ought to find out how he will get there.
- Our client wants to know why they have been growing at 3% per year whereas the competition has been growing at 5%.
Accurately, the only means to grow income is to boost quantity sold or the cost for a unit sold. This mathematically developed system can add some vital structure to your tactic, but don’t allow it limit your creative thought process.
A company can also grow by expanding or adding new forms of distribution channels (e.g. retail stores, online, catalogues, or affiliate partners). It can also initiate new products or fine-tune existing goods to better suit their clients. They can also review their marketing and sales strategies. Finally, the company can also grow in giant strides by buying up another complete company.
2) Profitability
Profitability matters directly handle the amount of money generated by a business. For instance:
- Our client manufactures ceramic mugs. Profits have plummeted within the last three years. We are expected to decipher the problem and develop the solution.
- One of our clients is a distributor of propane accessories and propane. Their CEO was recently reprimanded by one of the Wall Street Analysts for producing margins well below the standard obtainable in the industry. He needs our help to find out where the opportunities for margin increase are.
When handling a profitability problem, never hesitate to tackle the known drivers of profitability – cost and revenue. Revenue could be split down further into prices, quantities as well as product mix. Separate the revenues though helpful. Then ensure you examine both the variable costs and fixed.
Often checking up revenue first provides insights as to what may be driving the prices. If assessable, some standard data — either externally (against competitors) or internally (against regions, different stores, plants, etc.) can really be of help in shedding light on what might be happening in the company.
3) Pricing
Consulting interview questions on pricing, centre on the optimal price or means of figuring out the optimal price for a particular service or product. For instance:
- One of our clients just invented the food replicator from “Star Trek” that has the ability to instantly make any delicious meal you can think of. They would like to know how much to charge for it.
- Our client is planning to readjust their prices for their complete condiment product line. How do you advise them to tackle this problem?
In terms of determining prices, there are three essential ways to develop your approach.
First is cost-based pricing. This is the way engineers view pricing. Your cost per unit is determined, then a reasonable margin is added on top of that. However, this is an incomplete method, but it sure helps provide you with some perspective about the minimum feasible price.
Second is alternative-based pricing. With this method, you check how the alternatives (e.g. substitute or competitors) are priced and compare with your product price.
The third approach happens to the customer’s maximum readiness to pay. Consider the ultimate essential advantage brought about by the product (e.g. time-savings, cost-savings) and then put a dollar amount to it. For instance, if a product lowers the time a heart surgery procedure takes by 20 minutes, with the total hourly cost of running the operating team calculated, 1/3rd of that amount provides you a good guess of the value of thet time saved.
Traditionally, the cost-based method will give you a theoretical base for the price (if you sold for a less amount, you’d lose money), while the readiness to pay method provides you a theoretical limit (no reasonable customer will ever pay any higher than that). Arriving at the final price regularly depends on using qualitative factors to select a reasonable figure somewhere in-between both of them.
4) New product
New product instances deal with a new invention or idea for a company. For instance:
- A client has created an iPhone cover that looks just like a normal cassette tape player. What is the next step they should take?
- One of our clients has stumbled into a chemical compound that removes body hair permanently from a given area. Do you advise them to launch it?
New product situations require you look at a broad variety of issues. An essential understanding of the product, customers, company, competition and go-to-market method will be very crucial.
A number of new product cases move into the figures associated with expected prices and costs. When these figures materialize, interviewers often want you to analyse a break-even volume (or the volume relevant to achieve pre-determined business goals) and find out if such a volume is attainable.
