The Case Interview
On the spot, and doing all the math in your head, how would you answer these questions?
1. How many checked bags pass through San Francisco International Airport in an average day?
2. Estimate the size of the market for hair coloring in Canada.
3. How many pharmacies are there in the US?
Imagine answering these questions during a job interview. The interviewer doesn't care if the answer is right. You're evaluated on your thought process and not your ability to randomly guess.
1. I'd estimate the average number of daily departures/arrivals at SFO, the number of passengers per departure, and the average number of bags each passenger checks. Then I'd crunch the numbers:
Average # of daily departures/arrivals at SFO:
I'd estimate domestically (including Canada and Mexico) probably 15 airlines fly in and out of SFO. I'd estimate an average of 40 daily departures per airline, based on the assumption that SFO may be a hub for an airline, in which case it would have hundreds of departures, and that some airlines may have only 1-2 daily departures. So 15 x 40 = 600 daily departures. Then I'd double the number to account for daily arrivals, so 1200.
Internationally, SFO serves Europe, Asia, and Australia. I'd say among all airlines SFO does 25 daily departures to Europe, about 40 daily departures to Asia, and 4 daily departures to Australia/New Zealand. 15+20+4 = 69, then I'd multiply it by 2 to account for the daily international arrivals, so 138, which I'd round up to 140 for easy mental math.
Then I'd calculate # of passengers per departure and arrival. Domestically I'd estimate an average of 150 passengers per flight, assuming that some domestic flights might be in jumbo jets with hundreds or passengers, or puddle jumpers with only 20 or so passengers. So, 1200 x 150 = 180,000 passengers. Internationally I'd assume an average of 250 passengers per flight. So 250 x 140 = 35,000 passengers.
Then I'd calculate # of bags checked per passenger. I'd assume on average for domestic flights each person checks 1-2 bags, so 1.5 for calculation purposes. And on international flights, we could assume more bags are checked, so I'd use 2 per passenger. 180,000 x 1.5 = 270,000, and 35,000 x 2 = 70,000. 270,000 + 70,000 = 340,000.
So about 340,000 checked bags pass through San Francisco International Airport on an average day.
2. Assume the population of Canada is 30 million people. I'd also assume the average life expectancy is 80 years, and that there are equal numbers of people of each gender. So 15 million males and 15 million females.
Then I'd simplify further by segmenting into four 20-year age blocks, so that each "block" of people, per gender, has 3.75 million people. Then I'd make assumptions on how many people in each group would use hair color. I'd assume that in general males use hair color far less than females. Females, even at a young age, would use hair color for highlights or other cosmetic purposes, and that many people, as they start reaching middle age, will begin using hair coloring once gray hairs start popping up. I also assume that as people reach the oldest age bracket (61-80), fewer people use hair color once they realize they've lost their youth. So, I'd crunch the numbers and add them up:
Age Range% and # of males who use hair color % and # of females who use hair color 0-20 5% (187,500) 25% (937,500) 21-40 10% (375,000) 40% (1,500,000) 41-60 20% (750,000) 50% (1,875,000) 61-80 5% (187,500) 20% (750,000) Total 1,500,000 5,062,500
So the market size of hair coloring in Canada is 1,500,000 + 5,062,500 = 6,562,500, or about 6.56 million people.
3. I'd use Lawrence, KS as a baseline, since it's an "any town" that's neither urban nor rural. I'd estimate there are about 20 pharmacies in Lawrence, including the ones in the grocery stores, the ones in Walmart and Target, standalones like Walgreens or CVS, mom and pop stores, hospital pharmacies, and the university pharmacies. There are about 100,000 people in Lawrence, or one pharmacy for every 5,000 people. The US has about 300,000,000 people, so there are about 60,000 pharmacies in the US.
If you're looking into a career in management consulting, like I am, you have to be prepared for a stringent interview process. Interviews usually last for 3 or more rounds. Besides the standard behavioral interviews you find in most professions, you'll probably have one or more rounds of "case interviews". These would include off-the-wall questions like the ones above, or questions like the ones at the end of this entry, which cover a hypothetical business case and would require you to find solutions. There's no one right answer; the interviewer is just being tested on his/her ability to analyze a business scenario, the ability to think (under pressure and time constraints), and the ability to articulate answers clearly and in an organized manner. Since you don't know what kind of business case you would be getting, you basically have to prepare for anything. And I'll be frank, it's intimidating.
(Reportedly, many interviewers would also use this opportunity to test the candidate's poise and ability to take criticism. They'd do this by either giving the candidate the silent treatment or berating the candidate's answer.)
Of course, the questions above are just the basics; they merely test the interviewee's thought process. The real case interview questions are like the ones below:
1. Our client has developed an over-the-counter weight-loss pill that burns bodyfat if taken on a daily basis. It has also been approved by the FDA. Estimate the size of the US market and tell me how you would price these pills.
2. Our client, Delta Airlines, has a fortress hub in Cincinnati. They just found out that Southwest airlines will begin flying into Cincinnati, where they will offer low airfares and potentially threaten Delta's market share. What should Delta do?
3. Our client, a clothing retailer, has faced a decline in profits last year despite achieving record sales. What's going on, and what do you recommend they do?
4. Our client is a medium-sized diaper manufacturer that currently uses antiquated business software solutions. It wants to upgrade its software to a packaged type, such as Oracle, SAP, or JD Edwards. How would you go about recommending which product would best suit their needs?
You'd usually be given about 30 minutes to answer these kind of cases, and you're expected to ask relevant questions and get more information from the interviewer before making your decision. For the record, in a recent interview, I had to answer a case question very similar to the one underlined. How would you answer them?
1. How many checked bags pass through San Francisco International Airport in an average day?
2. Estimate the size of the market for hair coloring in Canada.
3. How many pharmacies are there in the US?
Imagine answering these questions during a job interview. The interviewer doesn't care if the answer is right. You're evaluated on your thought process and not your ability to randomly guess.
1. I'd estimate the average number of daily departures/arrivals at SFO, the number of passengers per departure, and the average number of bags each passenger checks. Then I'd crunch the numbers:
Average # of daily departures/arrivals at SFO:
I'd estimate domestically (including Canada and Mexico) probably 15 airlines fly in and out of SFO. I'd estimate an average of 40 daily departures per airline, based on the assumption that SFO may be a hub for an airline, in which case it would have hundreds of departures, and that some airlines may have only 1-2 daily departures. So 15 x 40 = 600 daily departures. Then I'd double the number to account for daily arrivals, so 1200.
Internationally, SFO serves Europe, Asia, and Australia. I'd say among all airlines SFO does 25 daily departures to Europe, about 40 daily departures to Asia, and 4 daily departures to Australia/New Zealand. 15+20+4 = 69, then I'd multiply it by 2 to account for the daily international arrivals, so 138, which I'd round up to 140 for easy mental math.
Then I'd calculate # of passengers per departure and arrival. Domestically I'd estimate an average of 150 passengers per flight, assuming that some domestic flights might be in jumbo jets with hundreds or passengers, or puddle jumpers with only 20 or so passengers. So, 1200 x 150 = 180,000 passengers. Internationally I'd assume an average of 250 passengers per flight. So 250 x 140 = 35,000 passengers.
Then I'd calculate # of bags checked per passenger. I'd assume on average for domestic flights each person checks 1-2 bags, so 1.5 for calculation purposes. And on international flights, we could assume more bags are checked, so I'd use 2 per passenger. 180,000 x 1.5 = 270,000, and 35,000 x 2 = 70,000. 270,000 + 70,000 = 340,000.
So about 340,000 checked bags pass through San Francisco International Airport on an average day.
2. Assume the population of Canada is 30 million people. I'd also assume the average life expectancy is 80 years, and that there are equal numbers of people of each gender. So 15 million males and 15 million females.
Then I'd simplify further by segmenting into four 20-year age blocks, so that each "block" of people, per gender, has 3.75 million people. Then I'd make assumptions on how many people in each group would use hair color. I'd assume that in general males use hair color far less than females. Females, even at a young age, would use hair color for highlights or other cosmetic purposes, and that many people, as they start reaching middle age, will begin using hair coloring once gray hairs start popping up. I also assume that as people reach the oldest age bracket (61-80), fewer people use hair color once they realize they've lost their youth. So, I'd crunch the numbers and add them up:
Age Range% and # of males who use hair color % and # of females who use hair color 0-20 5% (187,500) 25% (937,500) 21-40 10% (375,000) 40% (1,500,000) 41-60 20% (750,000) 50% (1,875,000) 61-80 5% (187,500) 20% (750,000) Total 1,500,000 5,062,500
So the market size of hair coloring in Canada is 1,500,000 + 5,062,500 = 6,562,500, or about 6.56 million people.
3. I'd use Lawrence, KS as a baseline, since it's an "any town" that's neither urban nor rural. I'd estimate there are about 20 pharmacies in Lawrence, including the ones in the grocery stores, the ones in Walmart and Target, standalones like Walgreens or CVS, mom and pop stores, hospital pharmacies, and the university pharmacies. There are about 100,000 people in Lawrence, or one pharmacy for every 5,000 people. The US has about 300,000,000 people, so there are about 60,000 pharmacies in the US.
If you're looking into a career in management consulting, like I am, you have to be prepared for a stringent interview process. Interviews usually last for 3 or more rounds. Besides the standard behavioral interviews you find in most professions, you'll probably have one or more rounds of "case interviews". These would include off-the-wall questions like the ones above, or questions like the ones at the end of this entry, which cover a hypothetical business case and would require you to find solutions. There's no one right answer; the interviewer is just being tested on his/her ability to analyze a business scenario, the ability to think (under pressure and time constraints), and the ability to articulate answers clearly and in an organized manner. Since you don't know what kind of business case you would be getting, you basically have to prepare for anything. And I'll be frank, it's intimidating.
(Reportedly, many interviewers would also use this opportunity to test the candidate's poise and ability to take criticism. They'd do this by either giving the candidate the silent treatment or berating the candidate's answer.)
Of course, the questions above are just the basics; they merely test the interviewee's thought process. The real case interview questions are like the ones below:
1. Our client has developed an over-the-counter weight-loss pill that burns bodyfat if taken on a daily basis. It has also been approved by the FDA. Estimate the size of the US market and tell me how you would price these pills.
2. Our client, Delta Airlines, has a fortress hub in Cincinnati. They just found out that Southwest airlines will begin flying into Cincinnati, where they will offer low airfares and potentially threaten Delta's market share. What should Delta do?
3. Our client, a clothing retailer, has faced a decline in profits last year despite achieving record sales. What's going on, and what do you recommend they do?
4. Our client is a medium-sized diaper manufacturer that currently uses antiquated business software solutions. It wants to upgrade its software to a packaged type, such as Oracle, SAP, or JD Edwards. How would you go about recommending which product would best suit their needs?
You'd usually be given about 30 minutes to answer these kind of cases, and you're expected to ask relevant questions and get more information from the interviewer before making your decision. For the record, in a recent interview, I had to answer a case question very similar to the one underlined. How would you answer them?