McKinsey & Company Interview Questions, Process, and Tips

Q1. Tell me about yourself.
Add your answer
Q2. Why do you want to join McKinsey?
Add your answer
Q3. Would you regret ranking McKinsey first if you get rejected right now?
Add your answer

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.

Q1. Tell me about yourself.
Add your answer
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
Answered by AI
Add your answer
Q3. What did you do yesterday apart from preparation?
Add your answer

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.

Q1. Tell me about yourself?
Add your answer
Q2. Where have you worked? Describe your role.
Add your answer

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 yourself.
Add your answer
Q2. Why McKinsey?
Add your answer

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.