Guesstimates and Case

Studies
 Case Interview

 CASE
 Consulting firms use cases to gauge how well the candidate will
perform on the job and if he/she will like consulting as a job.
 The case is given as a 3-5 statement caselet
 The caselet is either number based or strategy based.
(Guesstimates may be given either as a part of number based or
strategy based case)
 The caselet gives the objective of the case
APPROACH

 Take 1-3 minutes to structure your thoughts. You are not judged on the
final solution that you recommend; but on your approach to solve the
problem
 Feel free to note down your thoughts, take your time to think before
coming up with a solution
 Make sure that you have touched upon all the areas concerned to the
problem

 Make the session interactive by asking questions, instead of taking it

as a test. The interviewer would guide you to the solution by giving
hints if you approach is wrong

 Industry knowledge is not required - ask them questions about the

industry, which are relevant to the case
  Try to have your own approach to the problem. The standard frameworks can act as a
guideline. They would not like rehearsed problem solving approaches

 Have your own style of how you are going to approach cases (top-down, bottom-up etc.)

 Make sure to listen to the information given properly, before asking questions; keep noting
down any extra information given during the case discussion. You can take time to
restructure your approach with the new piece of information given

 Industry knowledge on few important sectors as telecom, IT will be helpful

 Take your mistakes easily. Be calm and try to address the problem based on the hints
provided to rectify any error made

 Make sure to summarize your findings and analysis so that the recruiter has a clear picture
of your thought process
 Could you estimate for me, the number of burgers a McDonald’s outlet sells in a day?

Types of Cases given during Consulting Interviews

 Abstract Cases – You wake up in a jungle one morning what do you do ?

 Guesstimates-Could you estimate for me, the number of burgers a McDonald’s outlet
sells in a day
 Profitability -“Our Client AB, part of the X industry, has been experiencing a revenue
decline of 10% over the last 3 years, they wish to hire you to turnaround the situation”.
 Market Entry
 Your client ABC Co. is a vertically integrated manufacturer, marketer and retailer of
vitamins for chicken in the US. Now to pursue growth overseas in emerging markets,
the management of ABC is thinking of entering the rapidly growing Chinese market.
You have been hired as a consultant to evaluate the feasibility of their market
expansion plan. Should the client ABC enter the chicken market in China or not? Why?
Abstract Cases – You wake up in a jungle one morning what
do you do ?

 Ask Preliminary Questions

 Understand the objective of the Case
 Give Solutions how ever radical, talk don’t think in your head.
 Having a conversation is key here
 Ask for help
 Make your assumptions heard while coming to the solution
 Guesstimates-Could you estimate for me, the number of
burgers a McDonald’s outlet sells in a day

 Preliminary questions
 Can we assume this to be an average McDonald’s as opposed to one in a specific
location like an Airport?
 Yes.
 Do we include sales from takeaways as well?
 Good question. It might be useful to include takeaways.
 Do we assume that the outlet serves other items like wraps/puffs etc.? We will discount
the people having wraps/puffs instead of burgers.
 Assume that burgers are the only item on the menu apart from fries and coke.
Why to ask Preliminary Questions

 It is very useful to scope out the problem correctly. This has 2 advantages.
 You need to identify the constraints you are working under so as to analyze
only what is required by the client and move through the case interview faster.
 The interviewer notes that you have thought about various aspects of a case.
Although he/she might not ask you to delve into the nitty-gritties, he/she is
assured that if you’re hired and assigned to a case, you will cover issues
exhaustively.
 Solution

 To simplify this problem, I would like to estimate the sales in (1) the restaurant and (2)
takeaways, separately
 Restaurant: I would like to approach this problem from a supply point of view. I want
to add that supply in this context means not the burgers that can be manufactured
but the maximum customers that can be seated in McDonalds on a given day. I will
further try to understand their consumption patterns to arrive at total burgers sold. 
 I’m assuming that an average McDonalds has about 50 seats and is open from 10 am
to 10pm. The consumption patterns of burgers are different throughout the day 
 The total number of burgers = (# hours) x (# people per hour) x (# burgers per
person) 
 We have used mathematics here to ensure MECE segmentation. 
 The total number of burgers = (# hours) x (# of seats occupied) x (# people per
seat per hour) x (# burgers per person) 
 The total number of burgers = (# hours) x (Total # of seats) x (average %
occupancy) x (# people per seat per hour) x (# burgers per person)
 Let’s say every person eats at McDonalds for 20 minutes. There are 3
(60min/20min) people occupying a seat every hour. Also, in my experience since
burgers in India are slightly smaller, I will assume 20% of the people eat 2 burgers
and 80% of eat 1 burger. That is an average of
  0.2*2 + 0.8*1 = 1.2 burgers per person per sitting. 
 The total number of burgers = (# hours) x (50) x (average % occupancy) x (3) x (1.2) 
 = (# hours) x (% occupancy) x (180 or approx. 200) 
 Since the occupancy varies according to time of day, I would like to do the math
separately for each hour. Do you think that works? 
 For simplicity’s sake, let’s take 3 scenarios: 100% occupancy (high traffic), 50% occupancy
(medium traffic), and 25% occupancy (low traffic). 
 High traffic: Lunch and dinner hours 
 Medium traffic: Post lunch and early evening hours Low traffic: Morning hours
 Calculation: (Following from the last mathematical equation) 
 High traffic: 5 hours * 100% occupancy * 200 burgers = 1000 burgers 
 Medium traffic: 5 hours * 50% occupancy * 200 burgers = 500 burgers 
 Low traffic: 2 hours * 25% occupancy * 200 burgers = 100 burgers 
 Total number of burgers sold in a day in a restaurant is 1600 (or ~1500 burgers).
Takeaways -Solution

  The takeaway counter has a queue during high traffic hours and it will be useful
to bring in my own experience at these counters to estimate the time that each
exchange takes.
  In my view,Time taken for every person = 75 s = 1.25 min 
 # of burgers in an hour = (# of people in an hour) * (# burgers per person) 
 I have assumed that the takeaway orders are slightly more than the restaurant
orders. # of burgers in an hour = (60/1.25) * (2) = ~100 burgers
 Assuming that the traffic of people is the similar for takeaways as well,
Takeaways -Solution

 High traffic: 5 hours * 100% traffic * 70 burgers = 350 burgers 

 Medium traffic: 5 hours * 50% traffic * 70 burgers = 175 burgers 
 Low traffic: 2 hours * 25% traffic * 70 burgers = 35 burgers 
 Total number of burgers sold in a day in a restaurant is 560 (or ~600 burgers).
 Hence, the total number of burgers sold every day at an average McDonald’s is
about 2200 burgers
 Practice Guesstimates

 Estimate the fleet size of Indigo ?

 Estimate the no of schools in Mumbai
 Estimate the market size of air conditioners in Mumbai
 Estimate the no of Red Swift cars in Chandigarh
 Estimate the no of trees in Thapar ?
 Estimate the no of Tigers in India ?
 Estimate the no of terrorists in India ?
 Estimate the no of leopards in Western Ghats ?
 Estimate the market size for IVF treatment in Delhi
 Estimate the market size for smart gadgets in India ?
 Mock Interview transcript

 Interviewer: There were Reynolds pen kept at the table. Can you tell me what is the market size of Reynolds
pen in IIMB?
 Candidate: Can I have a minute sir?
 Interviewer: Sure, take your time.

 Candidate: I would go for an approach of finding the total population of IIMB, calculating market penetration of
Reynolds in different segments and then calculating the market size.
 Interviewer: Approach looks fine. Please go ahead.
  Candidate: IIMB has a mix of PGPs, EPGPs, Faculty and their children. Assuming a PGP batch size of 400*2, Executive
MBAs of 100 and 80 faculty members. I am assuming a rough estimate of 4 members/household so there would be
320 members from faculty. The rough population of IIMB thus comes out to be approximately 1200.
 Interviewer: It seems fine. What will you do next?
  Candidate: IIMB has a batch size with people with high work experience. Not all of them would use Reynolds given
that it’s a cheap pen of Rs. 5. I will assume a market penetration of 40% in PGPs and 50% in executive MBAs. Though
professors wouldn’t use Reynolds as a regular pen but their children might use it. I will assume a market penetration
of 40% among professors.
 Interviewer: (Interrupts.) Can you tell me the components of a balance sheet?
  Candidate: Balance sheet is divided into 2 broad categories of assets and liabilities & equity. Assets
include cash, inventory, trade receivables, investments and intangible assets. On the other side there
is trade payables, current liabilities, long term debts, retained earnings and stockholder’s equity.

 Interviewer: Good. Go ahead with your guesstimate.

  Candidate: Total market size will be (800*40% + 100*50% + 320*40%). This comes out to be
approximately 500. Each pen if used completely could last for half a month and every person will use
2 pens in a month.
 Annual consumption of pens in IIMB is 500*2*12 which will be 12000. A market size of
around Rs5 *12000 = Rs. 6 lacs
 Interviewer: Sounds good. Thank you!
 Case Discussion transcript –How to increase Market Share

 Interviewer: Do you know about Gillette strategy to increase market share?

 Candidate: I know that Gillette has a unique strategy of selling razor at low prices but
sells blades at higher prices and makes on the money by repeated usage of blades

  Interviewer: This (1,2,3,4) is related to Gillette. Can you guess it now?

 Candidate: It could be number of blades in a razor. Like Gillette started with 1 blade,
moved to 2 and latest I know Mach3 has 3 blades.

  Interviewer: Good. That is correct. Now suppose you are the marketing
manager of Gillette and the growth is slowing down. What will you do to
increase sales?

 Candidate: We could grow in our present markets or extend to new markets. Gillette
having a huge global presence I will stick to present markets. Shall I go ahead? 
 Interviewer: Yes. What will you do?
 Candidate: I would try to understand the issue of why our growth is stagnating. Is it due to a competitor
producing high quality products or has the market been very competitive on prices. Apart from this,
competitor external factors might have affected our growth, like new products coming into fashion
replacing our razors.
 Interviewer: What do you think are the major threats for Gillette?
 Candidate: I feel Gillette is hugely penetrated. So a major threat for it is the growing demand for trimmers
and shavers among the population. Another threat could be shaving going out of fashion, where people
with beard are considered fashionable. If shaving goes out of fashion then people will reduce the
frequency of buying blades and our growth will decline.

 Interviewer: Being the marketing manager, how will you solve that problem?

 Candidate: I would design an IMC campaign with bringing shaving back into fashion. Most of the fashion
industry is controlled by fashion shows, magazines like Glamour, Vogue etc. I will collaborate with editor
in chiefs of fashion magazines and create a suitable environment of shaving being the “coolest thing”. I
would associate with fashion shows and ask designers to design themes around shaving. I will hire an ad
agency to make advertisements showing how shaved men are more successful in life and girls love shaved
men. I would associate with fashion shows and ask designers to design themes around shaving.
 Interviewer: Can you suggest any other ways to grow the Gillette business?

 Candidate: Women razors market is also growing and Gillette could design special soft razors. These
razors would be soft, delicate and flexible to cater towards target segment needs. I am not much
aware of women razors.
 Interviewer: (Laughs) That’s completely fine. The strategy seems good. Now suppose one of the
brands in US is gaining considerable market share in trimmers/shavers category. It is eating into
your market share and trimming has become a fashion there. What will you do?
 Candidate: I would do the above mentioned steps and bring shaving as a “macho” thing whereas
trimming being a more feminine stuff.
 Interviewer: If that strategy doesn’t work out. What else will you do?

 Candidate: I think Gillette is a mega brand and to develop new products would involve considerable
time. Besides I am not sure of the current capabilities to be in the trimmer business now. I will
acquire the small brand and make it a sub-brand under Gillette.