McKinsey & Company Interview Questions, Process, and Tips

Q1. Why do you want to work here, given your technical background
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Q1. What i know about this role
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Q2. Why did i apply for this role rather then going for my engineering domain
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Q3. What are your future aspirations
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General English grammar questions

Q1. General eligibility related questions
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Q1. There will be 4 zoom call one-on-one interview rounds
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Q1. Why McKinsey?
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Q2. Why Consulting?
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Q3. Think of a failure in life and how it changed you?
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Q4. Situational questions on teamwork & how to deal with team members?
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Q5. Finance as a specialization: what are your key learnings?
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Q6. Social projects done at Miranda House & difficulties and uncertainty faced in those: how did I overcome them?
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Q7. Experience at Citi: what was your project, key learnings, first corporate experience?
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McKinsey is working with an auto components supplier for automotive vehicles. Design a strategy to increase its revenues in the next 3-5 years.
[Please note that I stands for Interviewer and C stands for Candidate] 

C: Is there a target revenue increase?

I: Doubling in next 3 years.

C: Which geography is our client located in?

I: India

C: Who are the takers of these auto components and where are they based?

I: Indian companies: likes of say Maruti (for 4 wheelers) and Honda (for 2 wheelers).

C: What parts/components of the automobile exactly do they manufacture?

I: Exteriors (steel fabricated parts visible externally: say doors of the car, roof).

C: Should I focus on OEMs for 4 wheelers & if yes, which specific types of 4 wheelers (say passenger vehicles or commercial vehicles)?

I: Yes, both are serviced by the client. Focus on them.

C: I'd like to understand the industry landscape: growth rate of the company vis-a-vis industry.

I: Industry has been growing steadily. Our client is present & it's not losing market share.

C: What are the distribution channels: any direct-to-consumer touchpoint?

I: They supply to OEMs and also sell replacement parts via client --> distributors --> retailers -> car owners who need replacement.

At this point, I thought I fairly understood the case-at-hand and took a couple of minutes to think.

My structure was as follows:

Step 1: Identify the different sources of revenue existing and potential: Sales to car manufacturers & replacement market (existing), new product lines (car interiors like seats/steering): potential lines.

Step 2: For each revenue line, demarcated the markets (existing geographies v/s new ones)

C: What are the KPIs in this industry for the current geographies?

I: What do you think? Focus on existing product & market.

C:
1) Interoperability among different models/carmakers

2) Quality & longevity of product

3) Service guarantee

4) Price point

I: Point 1 & 4 were the key to success in this space.

C: Could you tell me about the players in the current space & if there are any foreign forces?

I: Mentioned Chinese players and how they were flooding the market with cheaper components to which the current costs stood no competition. Please recommend both short term & long-term solutions to combat this.

C: Mentioned few points like their source of low costs was cheap steel which was 80% of the auto-body. Short Term Solution: Demand exclusivity from OEMs to sign long term contracts.

Long Term Solution: Procurement Lever, Rationalizing steel usage, alternative material R&D, brand name development.

I: Thanks, that'll be all. Please synthesize the case for me.

Guesstimate the market for niche home products for smart personal devices for households.
[Please note that I stands for Interviewer and C stands for Candidate] 

It was more conversational. I did not realize when the case started.

Laid out the structure: number of HHs in India --> Urban/Rural Split --> Income split.

I: Please do the entire calculation and give me the numbers.

C: Started calculating & speaking the figures aloud.

I: Tell me the specific customer segments to target at the outset.

Identified the following target segments:

1) Rich & affluent urban nuclear families

2) Double Income No Kids segment

3) Tech-inclined singles

4) Old aged rich grandparents looking for convenience.

Q1. I have gone through your CV, but can you tell your life story and some key things from your resume?
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Q2. If we don't make an offer to you today, what will you do and how would you react?
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Q3. You said that McKinsey is your dream company, what is that about McKinsey?
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Q4. Tell me about a situation when you were leading a team, and the team didn't perform to its potential, what did you do?
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I am running a very niche NBFC targeted at MSMEs. I offer hassle-free small ticket loans of about 5-10-15 lakhs through digitization. We are not growing as per our expectations, please help.
[Please note that I stands for Interviewer and C stands for Candidate] 

C: Since when are we facing the problem and what is our target for growth?

I: We want to grow 3x-4x in a year, and the problem is happening for the last 12-18 months.

C: Which cities are we targeting currently? And MSMEs in which sector particularly?

I: We are currently focused on top 10-15 cities of India, on front end, we don't have any sectoral preferences, however, in the backend, most of our loans have been granted to MSME construction firms, restaurants and garages.

C: Can I know more about the loan terms: Collateral, documentation needed, time taken to disburse loans, Interest rates, payment terms etc.?

I: Loans are collateral free, we do full documentation check: where we need bank statements and P&L statements of the MSME for cash flow estimation, GST linkages etc. As I told the process is hassle free, we provide loans in 1-2 days, and since the loans are provided quickly, interest rates are little on higher side.

C: What is the time frame we are looking at? Is there any budgetary constraint?

I: Time horizon is 6-12 months and definitely no NBFC would be burning money like that.

(CASE SOLVING: STRUCTURE)

C: As we wish to grow the number of loans disbursed, we can divide it into: Number of customers * number of loans per customer
Focusing on number of customers: we can look at 3 dimensions:

1) New markets: Outside India and Inside India (Tier 2-3 cities where most of the MSMEs are based out of)

2) New products: Expanding into banking, Fintech (Digital payments, digital insurance, wealth tech etc.)

3) Market penetration: Attracting more no. of customers in the existing market.

I: Start with 3rd part.

C: Can I know more about the distribution model, is it all digital or we also have salesforce?

I: We operate largely online, however, salesforce is used to spread word amongst MSMEs.

C: I would like to structure this ahead in terms of

1) Awareness of our NBFC

2) Loan terms attractiveness

3) Accessibility of our salesforce and digital platform

4) Experience: issues in loan disbursal process

I: Okay, start from the first one then.

C: I would like to explore all possible mediums of lead generation like telephone calls, face to face visits, emails, website, apps and affiliate marketing. is there problem across any?

I: No.

C: Based on my prior case competition experience, where I did personal surveys with 30+ MSMEs, most of the mails etc. are made in English and loads of calls and emails are considered as SPAM by MSMEs, thus I would suggest calls and mails should be made in the regional languages of the MSMEs, and for greater trust and credibility, we should reach out to trade associations like Shankar Market Trade association in Delhi.

Generally, the MSMEs. are organized into trade associations and thus reaching out directly to these trade associations and their presidents, provide greater credibility and support from MSMEs.

I: Yes, this could be done, what else? You talked about Amazon; how can we leverage them?

C: Yes, we can do affiliate marketing on Amazon and their home page.

I: What about the various sellers who are selling on Amazon, aren't they also our target market?

C: Yes, absolutely, we should rather partner with Amazon to list us as SME loan provider while a seller is registering and creating profile with Amazon, to target them in the beginning only.

I: Yes, this could also be done. What next?

C: I would like to shift to loan terms now.

You mentioned that our rate of interest in higher, is it a possibility that we can reduce them a notch?

I: The problem is that we have little data, and thus interest rates are charged higher due to limited data.

C: In that case, for gathering more data, we should make use of open banking, partner with various digital payments providers like Paytm, PhonePe, Google Pay that these MSMEs use for collecting payments so that we can estimate cash flows of the MSMEs with greater accuracy based on thus data, as a result, our interest rates can also reduce.

I: Okay, what else?

C: We can also look at the tenure and frequency of payments (EMIs), increasing the tenure of loans, provides greater cushion to MSMEs and flexible loan payment terms like balloon payments, quarterly, half yearly or yearly installments rather than monthly payments, would ease the pressure on the clients. Also, we can facilitate Auto debits, ECS/NACH mechanism so that MSMEs are regular in their payments, and they don't default.

I: We are already having auto debit facility, what else?

C: I would now like to look at accessibility part. is our app present on Android/Apple phones?

I: Yes.

C: Is there any problem with loading of the website/app and working speed?

I: No.

C: Ok, then I would shift to our salesforce. Here, I would look at quantitative and qualitative factors. Quantitative: number of salesforces, number of visits made by each. Qualitative: quality of engagement with the MSMEs, negotiation skills, training, experience etc.

I: (Abruptly ended the case, and asked to tell 2-3 major ideas from the entire discussion).

Numerical Problem

I: We are a cellphone manufacturer; we are facing the following issue -

Current price: 1000$
Margin per unit: 200$
Currently selling 2 million units:

Sales head has come with the following proposal:

Reduce price by 5%, and volume would go up by 25%.

Evaluate the proposal on contribution margin basis.

Now, if you don't want your contribution to get impacted, by what percentage should your cost reduce.
Solved the numerical based on my course knowledge.

Q1. Tell me something about yourself.
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Q2. What are your academic interests?
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Q3. Why McKinsey and why you?
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Q4. Questions based on statistics.
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Q1. The first interview was majorly an interaction on different concepts of Statistics.
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Your client is a financial institution who provides loan services. They plan to extend loan facility to lifestyle products (TV, mobile phones) in the online market. Consider they plan to tie up with e-commerce platforms like Amazon, Flipkart etc. How many loans could they expect, given that more than 50% of the market will avail the service for products over ₹5k.
[Please note that I stands for Interviewer and C stands for Candidate]

C: Starting with India's population (took 1.4 Bn for ease of calculation), I would first split them on the basis of urban and rural population. Then I would consider Internet penetration in these regions. Further I would divide each region on the basis of age as it influences people's preference towards online medium for purchase of Lifestyle products. Am I heading in the right direction?

I: Go ahead.

C: So here we have the total market for lifestyle products. Next, the average life of a product is generally 3 years which I would factor in to get the annual demand. I would then look at income division to understand which people will actually turn towards loans for their purchases (Took the interviewer's buy in while fitting the number to get the market size)

I: So Disha, now that we do not have much time left can you summarize what steps would you take after this to get to the answer.

C: Sure, I would consider the 50% market size and considering around 80% lifestyle products (assuming phones, TVs, smart watches) are above 5K I would come up with the final market size.

Q1. Tell me something about yourself.
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Q2. Why McKinsey? Why consulting?
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Q3. What are your key strengths?
Ans. 
My key strengths include strong analytical skills, effective communication, and ability to work in a team.
• Strong analytical skills - I am able to break down complex problems and come up with effective solutions.

• Effective communication - I am able to clearly convey my ideas and thoughts to others, both verbally and in writing.

• Ability to work in a team - I am able to collaborate with others and contribute to the success
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Q4. Why mountaineering? Where all have you travelled solo?
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Q5. What do you write on?
Ans. 
I write on a variety of topics including business strategy, marketing, and technology.
• I write articles and reports for clients in various industries

• I also write blog posts and social media content for marketing purposes

• I have experience writing white papers and case studies for technology companies

• I am skilled in creating presentations and proposals for business strategy consulting

• I am proficient in using Microsoft Off
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A private equity firm is interested to invest in metros and ports in India. Help them decide.
[Please note that I stands for Interviewer and C stands for Candidate]

C: Understood the motivation behind entry into the Indian market and this sector and their existing portfolio. Clarified if there was any other motive for entering this market apart from profits. For the valuation part, I analyzed the targeted rate of return and time for recuperating the investment and the desired cost of capital.

I: A Canadian firm wants to invest in India and is looking for good income flow. The timeline is 2-3 months. There is no specific location or other constraints.

C: I analyzed the regulatory environment (given the nature of the sector, wanted to understand if there were any current / upcoming regulation regarding investments in infrastructure). Clarified that tolls form a major source of revenue for the highway (95% w.r.t this case). Therefore, I restricted the analysis to the revenue earned via tolls as a matter of this case. I mentioned about different types of valuations and clarified that Discounted Cash Flow (DCF) method will be used to value this project.

I: What are the potential risks to this investment?

C: Used a graph to show the risk factors and ROI indifference curve. Future economic outlook, systematic risk, operational, Technology changes in future, currency risk. Spoke about the risk equation of r = (1/N) *Var + (1-1/N) * Cov to highlight that there is always going to be some systematic risk and mentioned the risk mitigation strategies through hedging.

I: Can you calculate the loss in case a type of commercial vehicles stopped using the highway (agri vehicles)?

C: (Got data related to different type and proportion of vehicles that use the highway and calculated revenue lost if 50% of agri: commercial vehicles stop using the highway.

Data: 100,000 vehicles per day; 40% cars, 20% buses and 40% commercial vehicles with toll charges 100, 200 and 300 respectively. 50% agri and remaining auto commercial vehicles. Calculated per day loss of 3 Mio and was asked to list down the reasons for decline in agri commercial vehicles and ways to compensate for the lost income.

Case study on how to increase penetration of a global electronic manufacturer. The interviewer provide lot of data and charts.

Q1. Behavioral questions. Tell me about a situation where you managed ambiguity?
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Q1. Tell me about yourself.
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Q2. Why the trajectory of going to IIM Lucknow after Matrix?
Ans. 
IIM Lucknow is a prestigious institution for management studies and will provide me with the necessary skills and knowledge to excel in the consulting field.
• IIM Lucknow has a rigorous curriculum that focuses on developing analytical and problem-solving skills, which are essential for consulting.

• The institute has a strong network of alumni who are successful in the consulting industry, providing valuable connections and...read more
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Q3. What did you do yesterday apart from preparation?
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Your client is "CFA" a credit card issuer based in UK & West Europe. They are involved in issuing & servicing of credit cards. Currently are the 2nd largest player. 90% of the customers are retail consumers and 10% are small businesses. Further, CFA divides the customers as 'revolvers' and 'convenience'. Revolvers carry a balance & pay interest; Convenience customers pay the balance every month (i.e., do not default). They have built a strong reputation for consumer service. However, they are currently facing a decline in profitability over past 5 years.

We need to look into the reason and suggest a strategy for the same.
[Please note that I stands for Interviewer and C stands for Candidate] 

C: (Clarified the problem statement, all the points mentioned by the interviewer and the objective)

I would like to understand what function comes under servicing of a credit card: is it payments, partnerships?

I: Yes, servicing is basically end-to-end payments.

C: Alright, also, do they offer multiple types of credit cards for example a premium version, exclusive version etc.?

I: No, just one credit card.

C: Okay. The decline in profitability was seen just by CFA or was it an industry wide issue?

I: This was just limited to CFA.

C: Got it. I think I have all information I need to approach the case at hand. In case I need more information, I'll ask that as and when we are solving.

Now, I would like to take a minute to lay down my approach.

I: Sounds good.

C: (Made my approach chart, laid down the revenue & cost approach)

I: This looks good. However, I have some numbers with me that I would like for you to look and make sense out of it.

(Showed the following Exhibit)

Avg. customer tenure: 3 (5 years ago)
2 (Now)

Customer servicing cost: $3/customer/month (5 years ago)
$3/customer/month (Now)

Revolvers:-

Revenue: $1800 (5 years ago)
$1200 (Now)

Percentage of total customer: 50% (5 years ago)
40% (Now)

Acquisition cost: $50 (5 years ago)
$100 (Now)

Convenience:-

Revenue: $360 (5 years ago)
$240 (Now)

Percentage: 50% (5 years ago)
60% (Now)

Acquisition cost: $50 (5 years ago)
$100 (Now)

C: I'll just take a moment to note down these numbers & analyze these numbers.

Are these revenue & cost numbers per customer?

I: Yes.

C: Alright, so what I can see is that Avg. customer tenure has reduced and so has the Revenue across segment.

However, the CAC (customer acquisition cost) has increased. Even the share of the customer segment has changed. With this data, I would like to calculate the difference in profit from a customer 5 years ago vs today.

(Calculated profit for revolver & convenience individually 5 years ago, then took an avg.
Similarly, for today and took a weighted avg.)

(Numbers: 5 years ago, average profit CFA was earning: $922; Today: $452)

(Made sure to keep the interviewer in loop with my formula and then calculations)

I: This looks great! Let's sum up the case.

C: Yes, sure. So, we can see that overall, the profits have gone down. The points of issue seem to be the following: 2x increase in overall CAC, 33% decrease in the average tenure of a typical customer and percentage of convenience customers has increased. All this affects the profitability.