McKinsey & Company Interview Questions, Process, and Tips

Round: Case Study Interview
Experience: The first thing I did was to clarify the expectations of the client and any associated constraints. Priyanka clarified that we need to focus on EBIT and ROI improvement. The current EBIT and ROI were negative and our goal was to take them to 25% and 30-35% respectively. There were no financial constraints for the particular case. Structure: ROI = After Tax EBIT / Invested Capital Invested Capital = Working Capital + Net Investments I clarified that I would be looking to increase EBIT by increasing revenues or reducing costs or both. Then I would look at decreasing Invested Capital through analyzing components like Receivables, Cash, Inventory, Payables, Fixed Investments and Depreciation. She agreed and asked me to start by picking up one of the drivers. I picked revenues because there were considerable improvements required in both EBIT and ROI and cost cutting might not suffice. She nodded and we proceeded. I listed the various revenue drivers in a hospital: Diagnosis, OPD and Procedures (she helped me a bit here with correct terminology). After some discussion it was clear that the revenues from procedures, which was a major contributor to hospital’s income, were declining. The price of procedures had been constant so it was an issue with the number of procedures. Also, the other hospitals had lower prices for the same services hospital seemed to be charging a premium for their services and I had to find out why. I elaborated the various factors that would drive premium such as patient care, diagnosis authenticity, convenience and future tests required. She asked be to elaborate patient care. I listed 5 factors: doctors & nursing staff, length and time, accommodation, flexibility of meeting close ones, and miscellaneous things such as food etc. I also prioritized these putting doctors and nurses on the top. It was here that she revealed that some key doctors had left an year back and the hospital’s premium was to be attributed to the presence of these doctors when they were in service, This nailed down the key reason of decline of procedural revenues. Next, she asked me to look at reducing costs. I elaborated the entire value chain of the hospital: 1. Supply Side consisting of utilities, drugs and equipments 2. Operations consisting of procedures, labor and R&D. 3. Marketing and promotions After a brief discussion on the factors driving supply side costs, I identified that the procurement of drugs can be optimized through consolidating purchase. On the operations side, we figured out the wage structure was pretty much fixed and I detailed out a few recommendations here to improve labor efficiency. One was to use a performance based incentive structure with the use of balance scorecards and leading indicators to assess performance. She was quite happy on hearing this as this was part of the recommendations they had given to the client. The case ended here.
Tips: My advice to you would be that whenever in doubt about a new business, ask rather than guessing and spending time that could be utilized in more fruitful discussions.

Round: Case Study Interview
Experience: I tried to scope the problem down but Rajiv wanted me to structure my thoughts first and come up with an approach on a broader level. I came up with the following structure Structure: 1. Strategic Goals: a. Short term: Solve some existing problems and build a talent pool b. Long term: Impact on society and economy 2. Organizational: a. Supply of Labor Pool b. Attracting and sustaining employees i. Salary and Incentives j. Personal Development through trainings k. Challenging assignments l. Exit Options c. Execution to meet the expectations of the 4 stakeholders: District collectors, Pan-IIT, Government and Employees i. Management j. Teachers / Training k. Program Structure: Curriculum, Length, intensityl. HR m. Administration 3. Financial: Source of Finances, debt and equity distribution. Rajiv was fairly satisfied with the comprehensive structure and after a brief discussion, clarified that the focus of the present case was to just think about the building blocks of the organization. Since I had listed down quite a few things, he just wanted me to have a discussion on the various aspects of the problem and we chatted for 15 minutes on what should be the issues in each of the elements of the Organizational part and recommendations to tackle them. Detailing out an exhaustive structure and explaining my approach in detail gave the confidence to the interviewer. After that I just had to engage him in discussion on various aspects till he decided to close the case.
Tips: Try to scope down an open ended problem such as this. If interviewer wants to explicitly look at your broad level thinking, such as in my case, it is important to take your time and come up with as exhaustive a structure as possible.

Round: Case Study Interview
Experience: Since the problem given to me was very open ended, I started asking a lot of questions on the objective of the client and any constraints we need to consider in our analysis. Adheet revealed the following information: The suburb is still under development and there is no infrastructure as of now. The client is actually a large hospital chain in the country and is not looking for immediate profits but eventually within 3-4 years. Financial constraints not an issue. Hospital again! But the good part was that I had got some confidence on the business after having interviewed with Priyanka earlier.
Structure: a. NPV > 0 b. Determine cash flows: Revenues, Costs, Working Capital and Capital Expenditure c. Determine appropriate discount rate for cash flows: an appropriate way would be to use industry comparables of similar hospitals. He agreed and asked me to discuss the revenue aspect. I laid down the following approach: 1. Identify customer disease patterns and demographics. 2. Pick up the attractive opportunities that could ensure long term sustainability. Identify the customer segments to target. 3. Check if the opportunity aligns with business vision and company’s capabilities. 4. Determine the appropriate price for these services based on consumer willingness to pay To simplify things he gave me an additional data point here. The real estate developer of the area had predicted the following growth of population in that area: 100,000 in 3 years 500,000 by 6 years 1 million by 10 years. He then asked me to determine the healthcare requirements of these potential customers. I listed down 3 factors here: Socio Economic Status, Age and Idiosyncratic factors such as family history. He was impressed and asked me how I could determine the Socio Economic Status. I gave a lot of options here but he kept pushing that we had no access to any formal databases and some proxy was needed. After a bit of thinking I told him that the kind of apartments being bought by the families could proxy for their socio-eco status. This was what he was looking for and immediately gave me the following information. Super luxury flat (1 crores): 10% of families, luxury (50 lacs): 40%, 1 bedroom apartment (20 lacs): 50%. I asked about the average number of people per household and he gave me the numbers of 5, 4 and 3 respectively. I told him that even the relatively poorest of families were actually quite well to do as they could afford a 20 lacs flat. He agreed and asked me what kind of service on a broad level would suit our target customer segment. I told that 2 kinds of services should suffice here: Deluxe and Regular. Deluxe would include some premium procedures that could be utilized by either of the segments. Regular Procedures would be more day to day services provided to a wide spectrum of the population. He mentioned that regular procedures would need a breakeven volume to turn profitable and asked me to develop a timeline for introduction of the two kinds of services. Based on the population immigration information he had provided me earlier, I recommended that the client should start with deluxe services when the customer base would be small and eventually move to other regular services and customer base grows big enough to achieve breakeven. He asked me if there were any risks involved here and I mentioned that competitive threat could always be a concern here. I recommended that such a threat could be conquered to an extent by making appropriate arrangements for customers to receive these services at a nearby hospital of the same chain. He liked the idea since the hospital could bear initial losses. We had some more discussion on other issues of such as real estate, supplier contracts, equipments etc. before he closed the case. And as always, he discussed about movie making experience and also my work at Microsoft.
Tips: Be careful when the interviewer is giving a lot of numbers. He might be looking to test your quantitative abilities. Clarify upfront if in doubt.

Round: Case Study Interview
Experience: I started by laying down my hypotheses on why a 5th terminal should be built:
1. Reduce congestion on existing terminals by increasing capacity
2. Facilitate Growth of air traffic and passenger traffic
3. Achieve optimization between traffic on runways and terminals He wanted me to test the first hypothesis. I confirmed whether airport capacity can be defined in terms of passenger flow rate. He agreed but wanted me to look at another measure of capacity which is the air traffic flow rate. In simple terms, this was the maximum number of airplanes that can land or take off from the airport in a day.
I asked for specific information and got the following data:
1. Air traffic operates for 17 hours in a day.
2. Each terminal has 50 gates I said to figure out whether there is any real capacity increase we need to find out whether New Capacity = MIN{ Total number of airplanes determined by total gates, Total number of airplanes that can use the runway in a day} > Current Capacity He asked me to make the required assumptions and proceed. I made 2 specific assumptions:
1. Both runways are identical and capable of serving same traffic.
2. All airplanes on an average take the same amount of time while standing on gates and similarly while using the runway (take off or landing)
He then gave me the following data: A plane takes 90 sec on average on the runway while landing or takeoff. This meant that the runways can support a total of 17 * 2 * 3600 / 90 = 1360 planes per day. Next, he told me that every gate can support 5 planes on an average. This meant that with 5 terminals a total of 5*50*5 = 1250 planes can be held on the gates. This gives the new capacity = Min{1250,1360} = 1250 an additional capacity of 250 planes. So one part of the hypothesis was verified that there would be additional capacity added by building 5th terminal. Now we had to establish whether it would reduce congestion. We started discussing the various sub hypotheses that would need to be true for this to happen. Things such as feasibility of movement of passengers and staff from one terminal to another, movement of infrastructure(shops etc) to the new terminal and so on. We chatted for almost 10 minutes on this and he asked me to synthesize the case. The hypothesis had been proven right.
Tips: Practice hypothesis driven case solving as well in case you come across such an interviewer.

Round: Case Study Interview
Experience: I clarified what all businesses the client was running, the relative share of revenues in each and the competitive landscape in each. Then I laid down my approach:
1. Identify the attractive businesses for the future. This can be done using a 2X2 matrix of competition vs. growth opportunity.
2. Choose the ones that are feasible to focus on in the next 5 years based on company’s capabilities.
3. Chart out an execution strategy for these businesses accounting for challenges and the effect on bottom line.
4. Consider divesting the unattractive businesses considering the risk of impact on the existing ones since there is lot of interdependency in the web space. He was satisfied with the overall structure and drew out a chart with lots of customer and growth data on the existing businesses. It’s difficult for me to explain our discussion over here because first, the chart was fairly comprehensive and second, he asked me to hand over to him everything I had written while solving the case. On a broad level, we discussed the attractive business opportunities and what challenges we would have to consider. He asked me to give 10 specific challenges in one particular business and it was here that my Web 2.0 course learning and software experience helped me.
Tips: Push yourself when the interviewer says..”What else...” - this is an indication that the interviewer wants to check how creative you can get with your thought process.

Skills: Ability To Cope Up With Stress, Case Solving Ability, Case Analysis
College Name: Indian School Of Business (ISB)

Interview preparation tips for other job seekers - Focus on job satisfaction and skill development rather than merely on the brand name and salary.

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