Ernst & Young Management Consultant Interview Questions and Answers

Interview preparation tips for other job seekers - Get doomed and put a stick in your ang vishesh

Interview preparation tips for other job seekers - -Domain specifics questions asked
- Read the JD carefully
- one client interview will be there

Interview preparation tips for other job seekers - Keep calm stay focused and confident tell the truth and diversity of work you have done

Round: Case Study Interview
Experience: Looked at auto-components industry on my resume and said he would give me an auto-comp case.
Case: Client is a leading auto component manufacturer. It wants to increase profits in the next few years and wants to reach a target of $5 bn in revenues. It is currently at $1 bn.
I suggested there are 2 basic ways to do so:
- Increase volume
- Increase value add and thus margins (elaborated below)
Clarifying questions
Me: Asked what was the core capability of the manufacturer and
the kind of products it manufacturers.
The Interviewer (TI): Forging and forged components
Me: Geographic presence?
TI: India and some acquisitions in Europe.
Me: Is it into auto- comp outsourcing business?
TI: Yes
Me: Increase Volume as follows:
I said can we assume is it meeting demand?
Was asked to make assumptions and proceed. Now I moved into a monologue – coz I gathered that’s what he wants
Increase volume:
- So I said if we know it is lagging in demand, we should explore expansions options – add domestic capacity, acquire capacity externally – (also a increase value add option – refer below)
- Enhance product offering (all types of forged components based on core forging capability)
- Increase share of wallet ( Does a single OEM outsource all types of auto-components) ; Have we exploited any potential to cross sell – if he is buying power train (engine) components, should he also buy axle and chasis components from us
- External acquisitions: Dual shore manufacturing – have a low cost mfg base in India and China, acquire plants in Europe and America which has good customer relationships – thus improve customer intimacy by being geographically close to customer and improve share of wallet.
Increase value add:
- Any change in product mix – make more of critical safety components which provide higher margins
- Provide full end to end support – from design of components to testing – make attempts to support the entire life cycle of car platforms – this will also enhance value add and thus margins ( Explore options to acquire or build R&D centers)
- Compare costs in India and China, add capacity in China, if it reduces costs and enhances margins
Tips: Anything on your CV could be turned into a case. Spend lot of time thinking and reading about companies and industries mentioned on your CV. Whats good/bad about industry? How are companies exploring growth options and so on?

Round: Case Study Interview
Experience: Case:Client is an insurance company. They want to know how big is the insurance opportunity in India? Finally, given the size of the opportunity, what would you recommend as the next steps.
Me: Let me ask the usual clarifying questions, is the company into life insurance or non-life? Private company or a public company?
Interviewer: Life insurance, the client is a private company.
Me: To understand how big the opportunity is I would want to estimate the size of the insurance market.
Interviewer: In what denomination you would estimate the market.
Me: $ mm of life insurance premium
Interviewer: Great. So go ahead and do it.
Me: Sir, before I get into the number work, it will be useful to pictorially or graphically understand where does India stand on insurance penetrations relative to the world.
Interviewer: How would you do that? (It seemed he was very open to new ideas
as seen from his body language because he always sounded excited to hear
something new)
Me: You plot all the countries by insurance penetration ratios and see where India is in the stage of evolution in the insurance market
Interviewer: How would you define the penetration ratio?
Me: Insured population by Insurable population
Interviewer: Great. Now lets get to the number work.
Me: I took some time to think at this stage.
Usual method: Indian population, 30% urban, for now lets focus on the urban market, % of people who cannot afford insurance, I suggested if insurance premium exceeds a particular% of your annual income, then its not affordable, such population should be excluded or alternatively people below the poverty line. I suggested we could break down the population by Income class. As we discussed, it stood out that age cannot be a right basis, as people get their children insured and old people can also be insured albeit at a higher premium.
Interviewer: Great, let us assume you have done all that and the total size of
the market comes to $210mm. LIC’s market is 180mm and has 80%
market share. So what would your conclusion be?
Me:(I wasn’t very fluent at this stage …..somehow I got a bit confused at this stage…no particular reason…probably I wasn’t thinking calmly enough…. Later, with some push from him…this is what I concluded…
Me: Ok, so total insured market is then 180mm/ 0.80 which comes to approximately $205mm. Insurable market is $210mm. So penetration ratio is very high close to 95%. This leaves private insurers a market of only $5mm to pursue. So now how many private insurers are there?
Interviewer: 12/13
Me: Fine, then it is evident that private insurers are competing quite hard and each has a very minuscule share of the private market….and the nature of the game is to arrest market share from LIC, which may be very difficult.
Interviewer: We have now run out of time, so what would you suggest to the company?
Me: As of now, the market is very small and competitive for the private insurers. Going forward, the client would have to arrest market share from LIC and would have to do it better than other private players. So the key question client should ask itself?
- Do I have enough distribution capabilities to gain market share from LIC…coz in Insurance distribution pipeline is most critical. (Things like alliances with corporates, third party distributor alliances etc)
- Secondly, Insurance being a capital intensive business, due to solvency ratios, and unexpected insurance claims, do I have the deep pockets to sustain this market till I become profitable? – high shelf life before break even in insurance business
- Finally, Do I have the ability to offer innovative and customized insurance products to attract the customers?
Tips: - Power of good communication skills and engagement….You may not be reaching the answer…but by showing enough enthusiasm and energy about solving the case…..you allow the interviewer to help you a lot.
- Second, I made up for the not so sharp number work in my synthesis and recommendation. I did not restate facts, based on what I concluded and my industry knowledge, I suggested value added insights and recommendations.
- Lastly, knowing a bit about the industry helps you quote the right metrics like insurance penetration ratios, distribution pipeline etc (Doesn’t substitute pure problem solving skills but allows you to sound sensible)

Round: Case Study Interview
Experience: In round 2 i was directly given a case to solve. The case was:
Our client is a Chocolate confectionary manufacturer started in 1980. It did quite well till 1990. Post 1990, it has seen a revenue slowdown and a profitability slowdown. Can you help them figure out why?
Me: I drew the usual profitability tree. Revenue and costs.I took him through volumes ( Market size, market share, production) Price changes, if any? Variances in costs ?
Interviewer: Fine, lets look at the costs
Me: Let me list down the various heads of costs Variable costs: Direct material, labor, variable overheads Fixed costs: SG&A including distribution costs, interest costs, I also highlighted the overlap.
Interviewer: Fine, let me provide you some data. Write it down. Raw material costs (% of revenue) For the client is 25%, for competitors 20% Distribution cost (cents per bar): For the client 0.25c and for the competitor 0.15c. Let us explore the distribution cost first.
Me: How does the client distribute its products?
Interviewer: It has its own distribution infrastructure….the trucks, manpower etc.
Me: So can I say the client does distribution in-house. So do our competitors not do it in-house?
Interviewer: Yes, you are right, the competitors are outsourcing distribution. What do you think is happening here?
Me: Is it that distribution agent is operating at a higher scale because he is sourcing the business from various manufacturers. If yes, then this could be the cause of difference in cost.
Interviewer: That’s right. What else? Give me one more reason for difference distribution cost.
Me: Is it that transporters are making more number of trips, since our batches of production are small or not synchronized?
Interviewer: Fine, give me one more.
Me: On what basis do transporters charge us?
Interviewer: Based on hourly rate.
Me: This leads me to the hypothesis, that they may be spending lot of time waiting, at the factory without doing any productive work.
Interviewer: You are thinking right.....go on
Me: Phew! Is it that turnaround time per truck is too high compared to our competitors.
Interviewer: Why do you think that is happening?
Me: Distances are too far from our customers or our suppliers. We are not located at the optimal distance from either customers or suppliers.
Oliver: Great, now lets talk about the raw material cost.
Me: So what kind of chocolate is this? Like a Mars bar or something?
Interviewer: Perfect.
Me: So let me list down the ingredients ……..Milk, cocoa, and sugar would be the main ingredients
Interviewer: So lets talk about each ingredient separately.
Me: Milk is a commodity…..
Interviewer: Is Milk a commodity? Is it traded?
Me: No, its not traded, so its not a commodity (This was my clue….thankfully I picked it up…..you will see below how it was a useful)
Interviewer: Go on…think specifically about each ingredient
Me: Cocoa and sugar are commodities.....because they are traded.
interviewer: So?
Me: After a pause of thinking......... Have the prices gone up of late? If yes, “ They are not hedging the commodity costs”
Interviewer: Excellent...You are right...either they are not hedging it or not hedging it as much as they should.
Me: yah....may be not even things like long term supply contracts.
Case part II:
Interviewerr: Great fresh page………note down these numbers…..gave me a full profitability statement to make for 2 factories….one in UK and one in France…..with capacity utilization to be calculated, units produced, price, RM costs as % of revenue, Labor based on per hour etc.
Me: I did the numbers in a very traditional school boy like fashion, did not try any quick calculation tricks…..was very transparent and vocal about my calculations …..helped a lot in showing my comfort with numbers
Interviewer: So what is your conclusion?
Me:
UK France
Capacity utilization 54% 39%
Profitability % 46.2% 33%
This shows a correlation between profitability and scale utilization.
Interviewer: So what would you suggest?
Me: Why don’t we integrate the facilities…. I did a ball park calculation to see if capacity in UK would be enough to handle production in both UK and France. However, there could be a downside to shutting plant in France…
Interviewer: So what are the downsides?
Me: Transportation cost, labor retrenchment cost, loss of customer intimacy in France resulting in loss of certain customers…he kept saying what else….i kept giving him more and more reasons
Interviewer: Only one thing you missed out real option value, if the French market picks up again…
Me: Ya right….I agree.
Interviewer: Thanks Gautam. Excellent. I liked your idea of integrating capacity. I am very happy with the way case has turned out.

Tips: - Very closely watch the words of the interviewer so that you pick up the clues……write as clearly as you can on paper……it helps you organize your thoughts clearly.
- Again, enjoy the process…treat it like a learning process…..will help you specially with an interviewer like Oliver (the interviewer)…who keeps pushing for more and more reasons and is never satiated.
Its good to be able to talk about common people, it just improves the conversation….again nothing substitutes for being genuine and enthusiastic in personal interviews.

General Tips: 1) Use the Challenge-Action-Impact framework to prepare answers for teamwork, leadership etc. Prepare beforehand
2) Keep telling yourself…. So what? When you prepare these kind of answers
3) Don’t sound rehearsed for such questions. Pick up
something, you are genuinely proud of….It will show
through.
Skills:
College Name: Indian School Of Business (ISB)