McKinsey & Company Interview Questions, Process, and Tips

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Case 1: You are a consultant to the CEO of Hyundai sitting in March 2020. What would be your priorities/measures/concerns in the next 30 days with the COVID19 lockdown having just been imposed?
[Please note that I stands for Interviewer and C stands for Candidate]

C: (asked scoping questions about the company, its operations, and the situation) I think the way I would approach this is to look at the value chain of Hyundai and see where all one could face issues with the imposition of the lockdown - right from procurement of raw materials to sales and distribution.

I: I like the approach, but you are using a framework here. Let us change up the problem. Your client is a large dairy product manufacturer who is a market leader in India. They want to double their revenues in the next 2 years. Suggest possible avenues available to them.

C: (asked scoping questions about the company, products, competitors, customers, market context and constraints) So here we could look at multiple options. We could expand using our existing business and grow organically. However, given that we are a market leader, we may be unable to meet our growth targets. So, we could look at new products like frozen yoghurt or enter new geographies where we are likely or expect similar success like at home. Alternatively, we could go with the inorganic route and acquire a player in the existing or new markets that we presently operate in. Would you like me to look into any particular idea?

I: These are all good suggestions. Let us do another one - Your client is a large FMCG manufacturer/ company with multiple brands and products under its ambit. It has seen a decline in profitability despite no change in profit per unit or production costs. Why might this have occurred?

C: (broke down profitability mathematically) Could it be because prices and costs are both increasing by the same amount, leading to a decline in percentage terms?

I: Suppose that is not the case.

C: Then it could also be because the product mix has changed.

I: Absolutely. Thanks, Sathya, we can stop solving cases now. Would you regret your decision of ranking McKinsey first if you get rejected right now?

C: I would certainly cry myself to bed tonight, but I would take the same decision if given the choice once again.

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Client is the owner of a Research Institute and wants you to estimate the number of sport scientists that he can potentially interview for the position.
[Please note that I stands for Interviewer and C stands for Candidate] 

C: So, the skills that we’d be looking for would be a combination of nutrition/ medicine and physical education. Would that be correct?

I: Yes, the candidate should have knowledge of nutrition, biomechanics, recovery, physical activity etc.

C: Okay. I would like to divide this estimate in 2 parts. First- I’d like to estimate the potential number of candidates who have graduated recently, Next- I’d like to estimate the candidates who are already working in similar roles. Does that sound fair?

For estimating the number of recent graduates who can be our potential candidates, I’d like to first estimate the number of people who would have taken Biology and Physical Education as their subjects in class 12.

For reaching this number, I’d like to start with the total population of the country divide it into rural and urban. I would ignore the rural population as this is a relatively niche field.

I: Here he interrupted me to tell me that this approach is very broad, and we can’t possibly reach the solution this way.

C: Got it! So, if we know that approximately 10 lakh people sit for engineering entrance exams each year, we can take a factor of double that i.e., each year ~20 lakh people are looking to join graduate colleges.

I: This is fine. But this approach is similar to the one you used before. (This gave me the clue that he wants me to use the supply side approach).

C: Okay, we can try and estimate the number of colleges in the country and see the colleges that would have these subjects e.g., medical/ home science colleges.

I: Yes, Good. How would you estimate that?

C: We know in India there are state universities and central universities so we can proceed with that.

There are 30 states in India. We can assume that each state has at least 10 medical colleges. So, we get 300 medical colleges. We can multiply this by a factor of 1.5 to incorporate other home science and colleges of the related field.

Now, in these 450 colleges we can assume that there are 1500 students on average. This gives us a pool of ~650000 students. Of these 650000 students, we can assume that 50% go into pure sciences (medicine) 30% go for PHD/ other higher education and 20% want to change their field.

This gives us 130000 students. Out of these we need students who have the combination of skill set that we are looking for (knowledge of nutrition and body mechanics).

Since these are niche subjects, we can take a factor of 0.2 to get to our potential pool of graduate candidates which is 26000 candidates.

Now we can move to the second part of the guesstimate which is number of people who are already working in some related vocation.

For estimating the number of people who are in a similar vocation, I would first define the type of vocations. So, we can have people who are currently in the sports industry working as physiotherapists etc.

We can have dance trainers and gym enthusiasts as one category, The next category would be freelancers like dietitians etc. The last category would be ‘others’ primarily comprising of those graduates who had opted for research roles after their graduation and now want to return to the industry.

First we estimate the number of potential candidates in the sporting industry.

Let’s assume there are 16 IPL teams, each of these teams would have 10 people with the required skillset. Let’s say there are 20 such sports and leagues. We get a pool of 3200.

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Your client is a large FMCG company, and you are speaking to their supply chain head. This is post COVID second wave and he wants you to suggest some interesting things that they can do with their supply chain.
[Please note that I stands for Interviewer and C stands for Candidate] 

C: Started with asking about the business, geography etc. but was interrupted.

I: Assume it to be similar to Unilever. I don't want more questions, tell me how you would approach such a question.

C: Sure, I'd start by looking at their value chain, starting from R&D, forecasting, raw material acquisition, logistics, manufacturing, distribution, sellers, after sales activities.

I: Great, now what are the few main things you would want to know before evaluating?

C: I would want to know more about the network that the company has, how they handled the 1st wave of COVID and how those changes helped with the second wave.

I: They have 100 suppliers, 50% of the material is imported, 25 plants pan India, 3000+ distributors. During COVID, the plants were shut down for 2 months, and the whole supply network was shut as well. Manpower was reduced. Later, warehouses were increased to stock more, increased inventory days. So, let's look at forecasting and logistics. Let's start with forecasting.

C: Sure. When looking at the forecasting efforts I would look at it from a business and technical perspective. On the business end, the demand and supply would be coordinated. On the technical front, I would look at the kind of tools we have been using and if there is a scope for an upgrade.

I: Which tools?

C: Advanced analytics, machine learning, IoT etc.

I: How can IoT help?

C: It can provide some real time data, can help us identify consumer spending patterns, store traffic, improving communication between distributors and retailers.

I: Great. Let's move to logistics. Suppose the diesel price has doubled and the transporters are asking for double the money we used to pay them. What should we do then?

Data:
• Initial Cost of Diesel: 50/L
• Truck runs 200 Km/day, 25 days a month
• FC: 60,000/month
• VC: (2+price of diesel) per Km

C. Since there are fixed costs, the transporter is obviously not facing double the costs. To calculate the proper rise in costs, can I also get the number for mileage?

I: 5 Km/L

C: Initial cost = 60000 + [2*200 + (200/5)*50]*25 = 1,20,000
New cost = 60000 + [2*200 + (200/5)*100]*25 = 1,70,000
Percent change = 50000/120000*100 = 41%

The actual rise is 41%. Do we want to compensate them exactly or do we want to negotiate?

I: No, we want to be fair. Can you explain the methodology?

C: Explained my calculations step by step.

Q1. Tell me about your prior work experience.
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Q2. Challenges faced in JPM.
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JPM faces challenges in various areas including regulatory compliance, technology, and talent retention.
• Regulatory compliance: JPM has faced numerous fines and legal actions due to non-compliance with regulations.

• Technology: JPM has to constantly invest in and upgrade its technology infrastructure to keep up with the fast-paced industry.

• Talent retention: JPM has to compete with other top firms to attract and retain top...read more
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You have been approached by the CEO of a gym chain, currently having 5-6 outlets in India.

Due to COVID, they are experiencing lower footfall, with their revenues falling. You have been hired to help the company adapt to the new normal.
[Please note that I stands for Interviewer and C stands for Candidate] 

[The flow was conversational. It started with calculating revenue numbers, explored various streams of revenue and potential areas of improvement. Concluded the case with recommendations for increased subscription and retention]

C: Started with asking questions about the location of the gym, capacity, target customer segment (Low, medium or high-income brackets)

I: Location: Metro cities; capacity: 50 people; Income bracket: Medium to high.

C: What are the services currently provided by them apart from gym equipment and professional trainer? Do they have planned alternate sessions on say, Yoga or Zumba as well?

I: No, just traditional gym facilities.

C: Since we are considering the covid era, were there any restrictions imposed by the state/central government?

I: Yes, strict regulations on sanitization, temperature check and 50% capacity utilization were imposed. All of which has been duly obliged by the chain.

C: What was the fall in revenue and was the decline evident before Covid or sudden due to Covid restrictions?

I: The decline was sudden. Let me provide you with some case facts to better evaluate the situation. Current revenue: 10,000 per customer per month, average capacity utilization pre covid 80% and post covid 10%.

C: Based on the data, pre-covid revenue: 10,000*12*50*0.8*5 = Rs 24 crore across 5 outlets.

Post-covid: 10,000*12*50*0.1*5 = Rs 30 lakhs i.e., 85-90% fall in revenue.

For our analysis, should we also consider the cost aspect as some of the trainers may not be full time employees or were laid-off due to low footfall at the gym?

I: Assume all trainer to be full-time employees and no lay-off as it was against the company policy. We can focus only on the revenue aspect for now.

C: Since they have a traditional setup, can we explore potential avenues for revenue generation?

Gym has 2 targets currently, to acquire new customers and retain existing ones.

Recommendations to address both are:

• Starting transport facility: pickup and drop facility from home to gym

• Invite celebrity star to the gym and use social media handles to promote assurance and safety in opting for their services

• Personal reminder and motivation calls from trainers

• Develop online platform like Cult fitness and offer services like Yoga, Zumba and Mindful meditation sessions

• In-house restaurant: providing healthy food alternatives

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Case 1: Guesstimate the amount of cash withdrawn from an ATM in a day in BITS' Pilani campus.
[Please note that I stands for Interviewer and C stands for Candidate] 

[The original case was to estimate the money withdrawn from an ATM in a day at IIM-L but was changed since I had never been to campus. A few facts to be known about Pilani before we start: The population of Pilani is very low, and a huge chunk of the town’s population is students of BITS. There is only 1 ATM on campus (ICICI Bank): This question was asked to I in his interview at IIM-C]

C: Great! Wanted to clarify a few things: Are we speaking about a Covid scenario? Also, since BITS is a college campus, I wanted to understand whether we are speaking about any particular time period: vacations/ or should we consider it to be a time period during the semester?

I: Let’s take a pre-Covid scenario and you can consider that all students are on campus.

C: Great! I’d also like to know whether I should consider a normal day: i.e., no festival/ college event etc.? and whether we are looking at a weekday or a weekend as trends might be slightly different.

I: Consider a normal day on campus, and if there are any other factors you would like to scope, feel free to make assumptions and state them.

C: Awesome. There are two ways to approach this problem: First, we can look at the traffic at the ATM, and try to guesstimate the daily volume by analyzing the number of transactions and their ticket size.

I’d like to take a second approach though, i.e., estimate the total cash spent on campus/ by the campus population in a month. I’d then try to figure out how much of that cash is withdrawn from the ATM on campus and get a daily value by dividing by the no. of days in a month. Does that seem like a fair approach?

I: Sounds good. Let’s proceed.

C: There are two sets of people who would withdraw money from the ATM.

Those residing on campus and those residing outside campus.

Those residing on campus would be students, faculty and support staff, and restaurant and shop owners who transact heavily in cash. Those from outside campus, would be residents of Pilani who would come to withdraw cash from the ATM because there is no other ICICI ATM in the town.

There would also be speakers/ guests visiting the campus, and a small set of other people. For the sake of this discussion, I wouldn’t consider the last 2 cohorts of people as their relative size would be very small.

Does this breakdown seem fair and is there a particular cohort you would like me to analyse first?

I: Fair. Let’s proceed: choose any cohort you would like to analyze further.

C: Sure, let me start with students. I would break them down year-wise and also break them on the basis of low and high spending capacity. I would factor in whether someone’s family had to take a loan to fund the education as a proxy for whether someone would have a low or high spending capacity.

1st, 2nd and 3rd year students would have a certain spending habit. I would estimate this at a low and high level. 4th year students (since they have savings from a 6-month internship) and master’s students would have higher spending patterns, so I would take in different multiplier factors over the base numbers to estimate their spends.

I: Sounds good.

C: I would now break down the spends into major buckets: Food, travel, utilities, stationery & merchandise, alcohol & cigarettes, and luxury spends/ indulgences.

[Broke down the values: also mentioned that most students budget their expenditure, so the individual breakdown didn’t matter as much as the total value.

Used my personal budget and spending patterns as a benchmark. Used a friend’s spending patterns as a benchmark for the other spending capacity cohort]

C: There is one major difference now though, from when this question was asked to you during your interview. BITS has an ID card system, where a lot of Food, travel, and merchandise spends are loaded onto the ID card and paid at the end of the semester, thus
requiring no cash.

Furthermore, a lot of tuck shops also use Paytm/UPI. So, I would factor in cash transactions as a percentage of total spend for each of the buckets.

[Broke down numbers: Gave a rough figure for students]

Case 2: Chelsea Football Club is entering the Indian market: list down the possible revenue streams and then analyze some nuances it must consider while making an entry (Market Entry + Growth Strategy Case)
[Please note that I stands for Interviewer and C stands for Candidate] 

C: I want to confirm whether we are speaking of CFC as a brand, or as a football team trying to enter India over here.

I: We want to analyze revenue streams for CFC as a brand.

C: Sure. CFC already exists in India, should I assume a hypothetical situation where the brand has not yet entered the market, or should I try to drive growth for the current operations.

I also want to understand the objective are we looking at profit/ revenue maximization or are we looking to use this entry to increase our fan base. I’d also like to understand timelines and constraints.

I: You can consider a hypothetical situation, though let’s try to first list down all possible revenue streams. The objective is profit maximization and let’s not think about timelines and constraints at the moment. If there are any more questions, feel free to make assumptions and state them.

C: Sure. I would break down the revenue streams into two parts: Those coming from core football operations and those coming from other operations. Non-football operations would majorly be:

1. Merchandise (jerseys, bobbleheads, signed memorabilia, partnerships with other brands etc.)

2. Events (trophy tours, meet the legends, fan meet-ups etc.)

3. Fan Clubs

4. Infrastructure (e.g., The Chelsea Pub: sports bars for screening/ fan meets etc.)

5. Sell Exclusivity (e.g., pay for featuring on our social media handle, paid subscription on the Chelsea 5th stand app to get exclusive benefits)

6. Partnerships would be an overlapping bucket, and we could boost revenue streams by partnering with other brands.

Football led operations would be:

1. Host tournaments

2. Partner with a local club

3. Training players: Coaching/ Chelsea Academy

4. Training coaches: Certification courses etc.

[The idea generation process was conversational in nature: I laid down my L2 and L3 structures and we discussed a bit on the points that I found interesting/ wanted to probe on as I proceeded. We had a fair bit of discussion on selling exclusivity. I mentioned that I had featured on the club’s official page for free, because I had a friend handling their social media account, but I would gladly pay a bit for the same. I also, constantly benchmarked v/s Arsenal and Manchester United, both of whom had a good brand presence in India].

I: Sounds good. Now assume that the club is entering the market. What are a few things you think your client should consider before entering?

C: [Scoped a bit on what the I exactly wanted: He was looking at whether I could identify nuances in the business, especially specific to football]. Great: so, I think since Chelsea is a European club it should consider the following:

1. When entering the football operations, the positioning and brand image considerations should be clear. Would the coaches be European?

If yes, how do we handle the country change process from an HR and cost perspective. If not, how do we maintain Chelsea’s brand image if Indians will be coaching students under the CFC brand. What would certification criteria be? Are we looking at a direct strategy or a franchise model?

2. The mindset of European consumers and Indians is very different. Pricing merchandise in India would be challenging, and we would have to know whether we are targeting volume or margins.

Indians have a variety of good options in the black market. I’ve been a Chelsea fan myself and have more than 10 jerseys spanning over a decade but only 2 of them are original. The counterfeits are of great quality and range between 5%-25% of the cost of an original.

3. While we are looking at revenue streams, I would also like to analyze long term customer LTV. New fans would mean increased broadcasting revenue shares and we should factor this into feasibility calculations.

It started with the basic introduction and the interviewer gave me a mini case.

Uber wants to launch chopper service in Mumbai, should they do it and if yes, what should be the pricing strategy?

(20 minutes)
I confirmed the case by iterating the case back. I asked some preliminary questions such as if they are the first one to launch such a service, what is the range of their service. I listed the potential market barriers and clarified the operating model (Company owned chopper or leased one).

I asked him about the initial pricing to ascertain if this business would be economically viable and he provided me a figure.

Identifying the expenditure from this transport mode helped me in identifying the earnings of such customers. I concluded that consumers in that earning band would rather prefer having their own chopper and might not want to have an uber service.

A firm with retail store chain (with basically 2 set of products) wanted to increase their forecast accuracy.

(30 minutes)
They initially asked me about the causes of poor accuracy and then they provided me a list of 5 different technology providers for accuracy improvement. They had the initial investment, promised forecast accuracy, yearly charge and some more data. I was asked to recommend the best out of them.

I asked them what is the payback period the client is looking for.

I compared the expected increase in revenue due to the improved forecast and the cost of investment to identify the best solution. The process included some number crunching, so I made sure how I arrive to a particular figure by breaking them into smaller pieces and keeping them informed about each calculation.

This round tested me on my analytical, decision making, and communication skills.

Q1. This round started with my introduction and the interviewee asked me questions from my CV mostly from my work in TSL. He deep dived into many of my CV points to understand about my work. (25 minutes)
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Q1. Professional and educational background was discuss to establish the relevancy of my profile and experience with the job
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Q1. Illustrate (in not more than a minute) as to why you are good at teamwork/ drive/ leadership.
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Our client is a wall paints manufacturer. They have 12% market share (by volume) and want to achieve a 20% market share over next 5 years. They want to grow organically; M&A is not an option. Advise the client.
[Please note that I stands for Interviewer and C stands for Candidate] 

(Reiterated the problem statement to ensure it is noted down correctly and started the discussion with a few clarifying questions to scope the problem)

C: Where does the company operate?

I: The company manufactures and has a sales footprint all over India.

C: How old is the company? Is Asian paints a good proxy?

I: Yes, you can assume it to be of similar size.

C: What kind of paints does the company manufacture?

I: The company manufactures different varieties of decorative wall paints for residential use.

C: How does the competitive landscape look like?

I: There are 4 main players including us with the following market shares:

A: 40%
B: 17%
C (us): 12%
D: 7%
Others: 24%

C: What are the channels of distribution?

I: We typically distribute through a network of over 25K multi-brand retailers.

C: What is are USP?

I: Quality of paints.

C: In order to grow its market share, the client can explore the following options:

1. Market penetration through improvements in product, change in price or channels of distribution

2. Expansion into new market (geography/customer segment)

3. New product development

I: This is an exhaustive list. We have the following data about the market size and respective market shares of each player in each category:

Paint segment: Premium
Market size: 20%
Market share: A 40%, B 5%, C(us) 40%, D 5-8%

Paint segment: Mid
Market size: 40%
Market share: A 40%, B 30%, C(us) 10%, D 7%

Paint segment: Economy
Market size: 40%
Market share: A 40%, B 20%, C(us) 0%, D 0%

C: From the data it is evident that top 2 players in the market, A & B are penetrated into the market for economy range of paints, and we are absent in this category.

I: Yes. There is no scope for expanding the product portfolio, but the company can penetrate into the economy segment. We have two options:

1. Plan A: Enter economy segment while retaining market share in existing segments

2. Plan B: Increase market share in premium and mid-range segment

Why don't you run some quick calculations to decipher how much expansion would be necessary?

C: In order to increase market share by going into the economy segment, the company will have to capture 20% of the market.

Alternately, it can increase market share in premium and midrange paints by 50% and 25% respectively.

I: Good. What do you think are the challenges the company will face if it goes ahead with plan A (expansion into economy)?

C: Since A & B have reasonable market share in the economy category, they have a strong hold over the distribution. We can expect the company to experience a challenge in establishing its distribution network in this category.

I: That is a good insight, distribution indeed is a challenge in the paints industry.

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