Type 2 – Market-sizing & guesstimateThese are on top of the list among popular case interview questions!
These questions go along the lines of “How many trees are there in Central Park?” or “What’s the market size of pick-up trucks in the USA?” The key to nailing market-sizing and guesstimate questions lies in not the closest results, but the most logical and structured approaches. In fact, the interviewer expects you to follow these four steps:1
Unless you come up with something about 10 times the reasonable estimate, don’t worry about being “wrong” – the interviewer is unlikely to have a “correct” number in mind, he/she just wants to see your structured mindset. This question type is so common, we devote a whole article to it, and our Case Interview End-to-End Secrets Program have a separate package on these questions. Check out our comprehensive guide on Market-Sizing & Guesstimate Questions for more details! Now, here’s a quick example for you to try and get used to this type:
How to Estimate Logically and Structurally
Break down the problem: The global smartphone market can be divided into three segments – developed countries, developing countries, and undeveloped countries. In each segment, the annual unit sales of smartphones depend on four variables:
Solve each piece:
|Population||1.5 billion||5.5 billion||1 billion|
|Phone-owning age||1.2 billion||4.4 billion||0.8 billion|
|Smartphone owners||1.2 billion||3.3 billion||0.08 billion|
|Annual unit sales||0.4 billion||1.1 billion||0.03 billion|
=> Estimated global smartphone market: 1.53 billion units per year => Actual 2019 global smartphone sales: 1.37 billion units (error margin: 11.7%)This market-sizing question is solved using a four-step process, which is explained in this article: Market-Sizing & Guesstimate Questions
Type 1 – Framework/Issue tree questionsThese are on top of the list among popular case interview questions!
If the interviewer asks you to identify factors contributing to a problem or to break down an entity (such as the revenue of a business), he/she is telling you to draw an issue tree. And to draw a spot-on issue tree, you need to master consulting problem-solving foundations, the MECE principle, and common consulting frameworks. You should check out our other articles on these topics before moving on, because mastering the issue tree is the key to acing every possible case interview. You also need good business intuition to draw good issue trees, so that’s all the more reason to start reading every day.
Job: Factors from the job itself. Further divided into 3 sub-branches
Company: Factors from the work environment within the restaurant chain, surrounding the affected jobs. Further divided into 2 sub-branches
Competitors: Factors from outside the restaurant chain, related to competing job offers. Further divided into 2 sub-branches.
For detailed guides on issue trees, frameworks and their principles, see the articles on Issue Trees, Case Interview Frameworks, and MECE Principle
Type 6 – Value proposition questions
No business or consulting candidate can succeed without understanding the customers! Value-proposition questions are not only about correctly identifying customer preferences, but also about analyzing and delivering the answer in a structured fashion. The former relies heavily on business knowledge and intuition, but the latter can be trained methodically and quickly. Personally, I use a “double issue-tree” – essentially a table with customer segments on one axis and proposed values on the other: For segmenting customers, you can use the following table. However, don’t over-rely on it, since there may be more relevant and insightful question-specific segmentations.
|Segments the market based on the geographical location of customers||Segments the market based on personal characteristics of the customers (e.g: age, income, etc.)||Segments the market based on how customers act||Segments the market based on how customer think|
In some cases, clarification is also necessary – both to avoid “answering the wrong question” and to narrow down the range of customers/values you need to cover in the answer.