Posts Tagged ‘Interviews’

Kellogg University Guide To Management Consulting, Case Analysis, and Frameworks

Sunday, April 11th, 2010

Management consulting is a very difficult field to enter.  I read this guide today from Kellogg and thought it would be helpful to LA readers brushing up for the interviews.  Next year’s recruiting season will be very strong.  Best of luck to you. ~Leverage Academy

Kellogg Consulting Club Case Book – Version 2.0


Vault Guide To IBD Interviews

Sunday, February 21st, 2010

Behavioral & Technical Interview Tips

[youtube]http://www.youtube.com/watch?v=2MT5RrLBrXk[/youtube]

~I.S.

Vault: Interview Tips II

Sunday, February 21st, 2010

Some good advice…

[youtube]http://www.youtube.com/watch?v=S1ucmfPOBV8&feature=related[/youtube]

~I.S.

First Credit Crisis – Ricciardi Family (1294)

Monday, February 15th, 2010
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ricciardi

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Vox recently published this article on the first credit crisis recorded in history.  Many economists tend to think that this phenomenon is a recent development, but throughout history, sovereign debt and credit contagion have been major issues. ~I.S.

It is widely believed that the current credit squeeze, leading to bank failures, is a modern phenomenon arising from the interplay of a historically unique set of circumstances that could not have been foreseen. But a team of academics – a finance professor and two medieval historians – at the University of Reading’s ICMA Centre has documented a medieval credit crunch that bears remarkable parallels with the current crisis.

The Ricciardi & Edward I

Before 1272, English kings had occasional dealings with Italian merchant societies, mainly in purchasing luxury goods for the household and arranging for balance transfers overseas. During the reign of Edward I (1272-1307), however, the king entered into a close financial relationship with one particular merchant society, the Ricciardi of Lucca (Kaeuper 1973). From 1275, the Ricciardi collected the newly-created customs duty on exports of wool, hides and wool-fells, worth around £10,000 per year, as well as receiving money from other sources of royal revenue. In return, they advanced significant sums in cash to the king and made payments to third parties on the king’s behalf, as and when ordered by royal letters. In total, between 1272 and 1294, the Ricciardi were involved in the collection and disbursement of around £20,000 per year, equivalent to roughly half of the king’s ordinary annual income. We could perhaps compare this arrangement to a modern current account, complete with extensive overdraft facilities (interestingly, Edward was usually overdrawn by £10,000-£20,000).

This relationship had great advantages for both parties. It allowed the king to anticipate royal revenues and so smooth the seasonal fluctuations in his income. Edward also enjoyed regular access to credit, allowing him to respond to unexpected events or undertake expensive projects without the burden of maintaining a large cash reserve. In return, the Ricciardi received some financial return on their advances, although this is usually hidden in the sources because of the religious prohibition on usury. We have calculated that, before 1294, Edward was probably able to borrow at rates of around 15% per year (Bell, Brooks and Moore 2009). Furthermore, the Ricciardi benefited from royal favour in their business dealings.

How were the Ricciardi and other merchant societies in a position to make such loans and investments? Their initial funding came from the partners of the society, who pooled their capital and received proportionate shares of any profits. Such involvement could be risky, because the partners could be held personally responsible for any debts owed by the society. They also received deposits, mostly from wealthy citizens of the Italian city-states (Hunt and Murray 1999). In addition, the Italian merchants profited from the management of papal taxes collected in England, and we would argue that this played a vital role in capital formation. In 1274 the pope had levied a tax on the clergy across Europe to support a new crusade, which raised a total of around £150,000 in England alone. The Ricciardi were one of several Italian merchant societies to act as papal bankers and were responsible for holding a portion (worth around £10,000) of the monies collected in England (Lunt 1939). This would have covered much of the king’s overdraft with them.

At any one time, most of this capital was committed to various ventures, including loans to governments and private borrowers, as well as investment in goods for trade. This was normally profitable, since this money was earning a good return, but it meant that the merchants only retained a small buffer of liquid capital. This was not ordinarily a problem, since most transactions could be carried out through credit, offsetting or balance transfers between merchants. When actual cash was needed beyond their own reserves, it could be raised from other merchants, either as a loan or by selling assets. For instance, the Ricciardi often acted as brokers raising loans for the king from a cartel of their fellow merchant societies (Kaeuper 1973). We can perhaps describe this as an early variant of the ‘Northern Rock’ business model, in that the Ricciardi relied on wholesale or interbank lending to fund their loans to the king.

Crunch

The trigger for the global credit crunch starting in 2007 has been traced to the ‘sub-prime crisis in the US, as the resulting uncertainty meant that banks were unwilling to lend to each other, thus removing liquidity from the market. In the early 1290s, there was a similar crisis of liquidity, as the papal tax discussed above was gradually called in by the pope and the French king exacted large sums from the Italian merchants in his kingdom, leaving the merchant societies under-capitalised.

Initially, it seemed as though the Ricciardi may have been escaped the worst of this. In 1290, Edward had finally agreed terms with the pope to lead a new crusade and, in return, was granted access to the proceeds from clerical taxation in England. As a result, the merchant societies with whom the tax had been deposited were ordered to deliver a first instalment of 100,000 marks (£66,667) to the Ricciardi on Edward’s behalf (see Lunt (1939) and Kaeuper (1973). It is unlikely, however, that any money physically changed hands, since it would have been more logical for the merchant societies simply to transfer their liabilities from the pope to the Ricciardi. On paper, the Ricciardi would have been credited with the extra money, but there was a corresponding danger should Edward seek to withdraw this tax revenue at short notice.

Unfortunately, this was precisely the situation that arose in 1294, when war broke out between England and France. As he had before, Edward turned to the Ricciardi for money to fund his armies. Although, in theory, the Ricciardi should have been well-capitalised, it seems that, in reality, the greater part of their resources was tied up and, fatally, the wider lack of liquidity meant that they could not raise money on the interbank market. These difficulties were exacerbated by the Anglo-French war, which effectively cut communications between Italy and England and left the merchant societies unable to update the account books of their various branches across Europe.
In their defence, the Ricciardi, much like banks today, would argue that their difficulties resulted from a short-term liquidity squeeze and that, overall, their assets matched their liabilities. In practice, however, the Ricciardi were unable to provide the English king with the financial support that he desperately needed. In response, Edward removed the Ricciardi from their position as collectors of the wool custom and ordered the seizure of the assets (mainly wool but also loans to private individuals) held by the Ricciardi and other merchant societies. This dealt a mortal blow to the Ricciardi’s finances and effectively marked the end of their long-standing relationship with the English crown.

Aftermath

The Ricciardi initially sought to recover their position through a series of ‘credit swaps’ and netting between their creditors and debtors (Kaeuper 1973).1 They requested a new accounting with Edward, in the belief that his ‘overdraft’, combined with the proceeds of the confiscated wool and debts, would offset most of the outstanding papal tax. Their other main creditor was the pope, and the merchants tried to persuade him to take over the debts owed to them in France and in Italy, on which he was better-placed to collect. To draw another parallel with more recent events, we can compare this to government intervention, exchanging Treasury-backed bonds for the more illiquid assets held by the banks.

Unfortunately for the Ricciardi, they were unable to convince governments to support them.

In the short term, Edward’s decisive actions succeeded in recovering around £50,000 from the Ricciardi. However, the fall of the Ricciardi had significant costs in the medium-term, since Edward still needed to raise huge sums of money to pay for his armies, now fighting in Gascony, Scotland and Wales, as well as the subsidies that he had promised to his allies in the Low Countries and Germany. As a result, Edward was forced to turn to moneylenders who both lacked the resources of the Ricciardi and charged much higher rates of interest (we have found examples of annual rates at 40% and 150%) (Bell, Brooks and Moore (2009).

Applying this experience to the current crisis, it is clear that taking punitive action against the banks today would have much more serious economic consequences, given modern reliance on credit. Edward himself may have come to the same conclusion. By 1299 he had entered into another long-term financial relationship with the Frescobaldi of Florence. When the Frescobaldi complained that news of this had led to a run on their bank, Edward promised them £10,000 sterling in compensation.2 Relative to the English crown’s ordinary annual income of about £40,000, this commitment is in fact greater than the initial £50 billion bank recapitalisation proposed by the British government in 2008.

Furthermore, deprived of access to credit, Edward was forced to rely on heavy taxation and his prerogative rights of purveyance and prise (compulsory purchases of goods). He also over-issued wardrobe bills (essentially government IOUs) to pay for wages and supplies. All of these measures aroused political opposition in England, and contributed to a major constitutional crisis in 1297 (Prestwich 1988). By contrast, Edward’s opponent, Philip the Fair of France, sought to raise money by debasing the French currency, reducing the silver content of the coins by as much as two-thirds. The income (seigniorage) received from these recoinages meant that Philip did not have to resort to direct taxation to the same extent as Edward or incur the same level of debt (Favier 1978). It is possible, however, that the long-term consequences of the expanding money supply for the French economy were more damaging that the medium-term pain of high taxation and debt in England. We would argue that this has considerable modern resonance, as today’s governments begin to grapple with the problem of how to pay for the obligations that they are currently undertaking.

Acknowledgement

This essay arose from the findings of an on-going three-year research project with the aim of investigating the credit arrangements of a succession of English monarchs with a number of Italian merchant societies.The study, based at the ICMA Centre, Henley Business School, University of Reading, is funded by the Economic and Social Research Council (ESRC) under grant RES-062-23-0733. For more information see: www.icmacentre.ac.uk/medievalcredit

Footnotes

1 This is based on a number of internal Ricciardi letters that survive in The National Archives (TNA E 101/601/5) and have recently been edited in Lettere dei Ricciardi di Lucca ai loro compagni in Inghilterra,1295-1303, A. Castellani and I. del Punta (eds.) (Rome, 2005).

2 The original letter survives in the National Archives, TNA SC 1/47 no.120 and has been translated in R. J. Whitwell, ‘Italian bankers and the English Crown’, Transactions of the Royal Historical Society, New Series, 17 (1903), pp.198-9.

Sources

Bell, A. R. C. Brooks, and T. K. Moore, ‘Interest in Medieval Accounts: Examples from England, 1272-1340’, History (forthcoming, Oct 2009).

Favier, Jean (1978), Philippe le Bel, Fayard

Hunt and Murray (1999) A History of Business in Medieval Europe (Cambridge, 1999)

Kaeuper, R. W. (1973) Bankers to the Crown: Edward I and the Ricciardi of Lucca (Princeton).

Lunt, W. E. (1939) Financial relations of the papacy with England to 1327 (Cambridge, Mass.), pp.311-46.

Prestwich, M. (1988) Edward I, London

Whitwell, R. J. (1903) ‘Italian bankers and the English Crown‘, Transactions of the Royal Historical Society, New Series, 17 (1903), pp.198-9.

For more information, please visit VOX…

~I.S.

Caterpillar to buy South Korean Manufacturer

Sunday, December 6th, 2009

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Caterpillar has entered an agreement to make a 100% stock acquisition of JCS, a subsidiary of Jinsung T.E.C., by January of next year.  The$36.1 million deal will add to Caterpillar’s presence in the South Asia market.

Caterpillar already has plants in China, Indonesia, and India; and the purchase of JCS will be Caterpillar’s first factory in South Korea.   Although Caterpillar has been hit hard by the recession, laying off 22,000 employees last year, the mining/construction equipment market in South Korea seems promising as Caterpillar’s 3rd quarter sales decline was most resilient in this region.  Global sales for Caterpillar were down a whopping 50% for 3-months ending in October.

This partnership shows vital signs of a growth in South and East Asia.  With the industrial boom of China and India, Caterpillar has acquired a strategic position to foster industrial expansion.

Caterpillar is a manufacturer of construction/mining equipment, diesel/natural gas engines, and industrial gas turbines.  Jinsung T.E.C. is a designer and manufacturer of heavy equipment and spare parts.

~Amit

The Ins and Outs of Investment Banking: Part I

Tuesday, November 17th, 2009

investment_banking

What is investment banking?

Companies need cash in order to expand and grow. Investment banking, also known as I-banking claims the responsibility of raising capital through the selling of securities (debt and equity) for these companies and advises them on financing and merger alternatives.  Some of the biggest players are Goldman Sachs, JP Morgan and Morgan Stanley.  (For a complete list of I Banks, please check the investment banking link on the forum)  Most of these I-banks are headquartered in New York City, the investment banking capital of the world.

The Breakdown

Most investment banks can be broken down into these areas:

  • Corporate Finance:  The bread and butter of an investment bank, corporate finance can be broken down into two areas: mergers and acquisitions and underwriting.  In M&A, bankers assist in the negotiation and structuring of mergers between companies.  Underwriting involves the process of raising capital for firms via selling either equity (stocks) or debt (loans and bonds).
  • Capital Markets: The role of this department is to manage the interaction of bankers in corporate finance with those in sales and trading.  Professionals are responsible for understanding recent transactions and using this information to formulate new transactions.
  • Sales:  Salespeople take the role of the classic retail broker (develops relationships with the individual and sell stock/stock advice), the institutional salesperson (manage larger groups of assets such as pension funds or mutual funds), or the private client sales (provide money management services for very wealthy individuals).
  • Trading:  Responsible for facilitating the buying and selling of stocks, bonds, and other securities.  Traders have two distinct roles in a company: (1) providing liquidity, where they act as a market maker by providing clients with the ability to buy and sell a security on demand, and (2) proprietary trading: taking on a trading position on behalf of the firm.  In proprietary trading, traders risk the firm’s principal.
  • Research: Analysts follow stocks and make recommendations to outside investors on whether to buy, sell, or hold securities.  Analysts typically cover one industry and will focus on approximately 20 companies.
  • Syndicate: This group is the link between corporate finance and sales.  This group exists to facilitate the placement of securities in a public offering.  Syndicate is also referred to as primary sales as securities are placed in the hands of the investors for the first time.

Commercial Banking and Investment Banking: What’s the difference and why do some firms have both?

Commercials banks: May legally take deposits for checking and savings accounts from customers.  The actual process is relatively straight forward- you (the customer) deposits cash into the bank which in turn pays you an interest rate (ex: 1-4%).  The bank then loans that money out to other customers looking to buy a house or finance a car at a higher interest rate (7-14%).  The bank’s profit is generated by charging a higher interest rate to borrowers than the interest rate they pay to depositors.  Examples of commercial banks include Bank of America, Chase, and Wachovia.  All loans made between commercial banks and individuals are contracts and are legally binding.  The terms of the contract (how much the bank will lend you and at what interest rate) is determined by the bank based largely in part according to your credit history.

Investment Banks: Unlike a commercial bank, an investment bank does not have an inventory of cash deposits to lend out to individuals or corporations.  Rather, investment banks work to match buyers or securities to sellers.  They also offer advisory services on mergers and acquisitions.  However, larger corporations that are in need of cash may also seek an I-bank to sell equity or debt (stocks or bonds) on behalf of the company to the general public.

Thanks to the Gramm-Leach-Bliley Financial Services Modernization Act of 1999, banks can now consolidate both commercial and investment banking into one firm (i.e. merger of Citicorp and Travelers Group into CitiGroup).  The largest bank with both sides today is JP Morgan after it merged with Chase bank.  The synergies created with merging both sides have caused these companies to grow at astounding rates.

Landing a Job in Investment Banking

The first step to obtaining a position in investment banking is having an understanding the industry.  Finance is a very competitive field with a lot of pressure and long hours.  However generously compensated through large salaries and equally great bonuses, I-banking is incredibly competitive and imposes a lot of pressure on employees.  Make sure to go on information interviews, read publications, and ask questions.  Some questions to ask include:

  • What is a typical day like?
  • What are the hours each week?
  • What is the future of the industry in the next five years?
  • What sectors of finance are hiring now?
  • How easy is it to move horizontally in the firm?  Vertically?
  • What is so exciting about this job?
  • What is the corporate culture like?
  • What is the typical career track?

If this is a field that seems appealing, checking in with career services, alumni, friends, and family is the next step.  Many finance companies recruit at targeted business school and accept resumes through the career center.

After you’ve landed the interview, the most important part is making a good impression.  At this point, you can be assured that the recruiter already thinks you have some basic skills necessary for the job.  Don’t be put off by the pressure and prepare as best you can by reading about the firm and the industry (see publications below).  Also, be confident as a career in I-banking making countless multi-million dollar decisions and your recruiter wants to see that you are confident in yourself to handle this position.

The Hiring Process

There are generally two parts to any finance interview which can be broken down into “the fit part” and “the technical part”.

Fit:  This part of the interview involves the recruiter assessing your personality and deciding if you are a good fit with the company.  Companies typically have very strong cultures that differentiate them from the competition and the interviewer needs to know if you share the same values and that you are the type of person he/she would like to work with.  Remember to emphasize your work ethic and dedication to the job.  However, being overly enthusiastic about something like long hours is overdoing it and your recruiter will see right through you.  Instead, be honest and acknowledge some of the negatives and your ability to deal with them.  Also, this is a very analytical field and requires a lot of number crunching.  Make your interviewer aware of these skills through past experiences, school work, or other jobs.

Technical:  This part of the interview is an evaluation of your finance knowledge.  If you do not do well in this part of the interview, the recruiter may either assume that you have no interest in this field, or that you are not competent enough to handle the position.  There are certain topics your interviewer may question you on including valuation techniques, basic accounting concepts, market valuation, discounted cash flow, capital asset pricing model, and NPV.   Your recruiter may also give you scenarios and ask you to work through a problem (also known as a case interview.  Please see “Mastering the Case Interview”)

Before any interview always remember to prepare properly through research of both the firm and the industry.  Know your position and what would be expected of you.  Also come prepared with questions to ask your interviewer to show you have an interest in the position and to get some more inside information. (Don’t ask questions that can be answered by visiting their website)  Practice in front of a mirror, friends, coworkers, or family.  Most important of all, be confident.  Recruiters want to see that you can handle this high stakes, high pressure job.

Trends in I-Banking

Bank Mergers: Beginning in 2003 with the acquisition of FleetBoston by Bank of America, M&As became the latest trend in I-Banking.  The following year JP Morgan became the second largest bank by acquiring Chase.  That same year, Wachovia acquired SouthTrust Corp.  More recently, there have a been a few notable M&As in the financial services industry that have caused several changes in banking structure.  For example, in 2008 Bank of America announced its acquisition of Merill Lynch, creating a firm with a breadth of financial services and increased opportunities to its customers.

In demand Skills: With the financial services industry slowly starting to recoup as the economic crisis slows, certain skills are in demand.

  • Financial Institutions Group Bankers:  Those that specialize in arranging mergers and acquisitions and other deals between insurance companies, banks, and distressed pools of capital.
  • Trading Technology: There is a growing need for those with the technology skills to devise and code trading models.  The growth of high frequency algorithmic trading may account for up to 40% of daily stock exchange volume.
  • Fundamental Credit Analysis: There is a high demand for in house credit skills due as participants of trading are still wary of credit risk.

For more insight into the I-Banking world, the following publication and sites are available:

  • Wall Street Journal
  • Business Week
  • The Banker (online)
  • Investor’s Business Daily/Investors.com
  • Kiplinger Magazine
  • Forbes
  • Money Magazine
  • The Financial Times

~Catherine B.

For more information on the field of I-banking and detailed analysis of positions, please visit Vault.


Common Interview Questions

Sunday, November 15th, 2009

timemachineinterview

This covers general interview questions encountered in most job interviews.  While these are generic questions, the answers should still remain relevant to the position being sought and should reflect a desire to work in the specific industry.

1. Tell me about yourself.

The most common interview and probably the hardest to answer.  This is a chance to give the interviewer a very brief rundown of your past including education, previous job titles, goals and experiences all specifically related to the position in which you are applying for.

2. What specific goals have you set for yourself/where do you see yourself in five years?

Striking a balance between honesty and ambition is key.  Honesty is important as interviewers can often tell when a candidate is lying to them, but keep the goals relevant to a professional career and most importantly, to the job you are applying for.  For example: “I hope to stay at the company and expect that in five years, I’ll make a significant advance in the organization.”

3. How has your college experience prepared you for a career in business/finance?

Discuss the key skills you have developed during your four years at the university in addition to the experiences you have had outside the classroom such as positions in clubs, organizations, etc.  Make sure to keep these experiences related to the industry.  Anything in a leadership position is usually a safe bet.

4. What has been your most rewarding accomplishment?

This is a great time to impress the interviewer with professional accomplishments.  Demonstrating success through use of quantitative data is usually the best way to go.  For example: During my time at Investment Bank X I was able to increase the rate of return by 10% for one of my private wealth client’s portfolios.

5.       Describe what you’ve accomplished toward reaching a recent goal for yourself.

Employers want to see that you are proactive.  Highlight a past experience in which you created a plan of action for yourself to achieve a goal.  Ex: Going back to school or taking a training course, forming a team, etc.

6. Tell me about a major problem you’ve had and how you handled it?

This is the part of the interview where the interviewer is looking for problem solving/conflict management skills.  Describe an instance in which you had to take an immediate plan of action to alleviate a situation.  Try to keep names out of the story such as former employers and companies, and don’t play the blame game.  This is also a way for the employer to see how you handle pressure.  Finance is a very stressful, high stakes industry and your manager needs to know that he/she can count on you to remain calm under a variety of situations.  Remember to mention the end result (using measurable data again is a great way to demonstrate progress/improvement)

7. What are Your Weaknesses?

Turn a negative into a positive. Pick out qualities that can be seen as both good and bad and no matter what, always give examples of how you are working to improve your behavior.

8. What is your desired salary?

Prior to the interview, conduct thorough research on the salaries of those in related positions with similar work experience.  While salaries will vary due to location, experience, size of firm, etc., having a relative range shows your employer you are prepared.

9.       Why did you decide to seek a position in this field?

Researches the company first so you have a good idea of what the firm offers its clients and employees, and then match those to your own personal goals and values.  Employers also want to see passion.  They don’t want to hire someone that just wants a job, so prove you’ve done your research on both the position you are applying for an the industry.

~Catherine B.

Please go to Quint for more information…

Managing Personal Finance

Sunday, November 15th, 2009

mint

Managing ones personal finance is a great way to learn more about the finance services industry and how to manage money on a larger scale.   Starting a portfolio will not necessarily help you nail that banking interview, but it will help you conceptualize the financial markets and understand the relationship between risk and reward.  Mint.com, a personal finance management site, allows user to add their bank, credit card, home loan and investment accounts to one portfolio and track their spending and performance.  Information is updated automatically and requires no written book keeping.

One of the best features of Mint is its budgeting capabilities. Very simple, users log on to their free account, and after reviewing their financial situation, set monthly budgets for all categories of their life including shopping, food, dining out, transportation, fuel, and anything else they wish to add.  Each month Mint tracks this data and sends out a personal report via email on how they spent their monthly budget and how far below or above the person went.

Mint also tracks credit card fees and interest rates to make a recommendation on the best credit card or bank to use based on that person’s spending habits.

Debt control is very important to recent graduates and can more often than not turn into a big problem.  Mint shows what you’ve borrowed and the interest rate at which you borrowed to help users pay off their most expensive loan first. The budget analysis tool is also good for making decisions where to cut spending as your frequency of visits to a particular retailer are also tracked.

Finally, learning to maximize a return on personal investments will prove to be helpful when embarking on a career in financial services.  Mint has a feature that allows users to track performance, returns, and fees on investment portfolios.  Users can compare their portfolio performance to the market, and track return on all accounts to maximize return and review asset allocation.  Additionally, small fees that become lost amongst the chaos can take away from investments such as fees to brokers, investment advisors, and 401(k) providers.  Mint tracks these fees so investors can see where they can save additional money.

~Catherine B.

Please visit Mint.com for more information…

Mastering the Case Interview

Sunday, November 15th, 2009

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The case interview is an analysis of a business question.  This is a very interactive process in the sense that the interviewer presents you with a business problem and asks you for your opinion on how to solve it.  Interviewers are not necessarily looking for an answer, but more a thought process that is both analytical (use of data and real life concepts) and creative (“out of the box thinking”).  In general, there are three types of case interviews.

Business Case:  You are presented with a business scenario and asked to analyze it.  In most interviews, the case is presented orally, but may be supplemented with handouts or slides.  Sometimes, this will also be a group case in which you are asked to collaborate with 5-6 other people.

Guesstimates: These cases ask you to make educated guesses on questions/situations that at times may not even seem relevant.  For example, “Approximately how many watermelons do you think are sold each year in the US?”  These questions test your ability on making rough calculations.

Brainteasers:  These questions are meant to test analytical skills, creative skills, and ability to cope under pressure.

What are interviewers looking for?

Leadership Skills: Demeanor throughout a case interview is a good determinant of your leadership abilities.  In many positions you may be asked to work in a team or direct others.  Employers want to see that you have the ability to stand strong during pressuring times.  Be confident in your interview, ask strong questions, and take charge.

Analytical Skills: While determining a solution, don’t lose sight of quantifiable data.  Derive a viable solution through breaking down data and formulating a pattern.

Presentation Skills: Interviewers are looking to see how well you can present your findings in front of potential clients.  They’ll be watching closely to see if you stumble over your words, use fillers such as “um” and “like”.  If you find yourself lost, take a deep breath and pause.  It’s better to pause than to ramble.

Energy: Qualifications are useless unless you are energetic and passionate.  Interviewers are looking for a firm handshake, bright eyes, a warm smile, and zest.

Attention to Detail: Displaying this trait is best noticed through how you logically approach the case by picking up on facts and themes.  You also want to be prepared.  If possible, take notes.

Quantitative Skills: You’ll eventually be dealing with number and interviewers are looking for your ability to manage and manipulate these numbers.  This is where many guesstimate questions appear.

Flexibility: This is an important characteristic of any employee.  Your flexibility is tested when an employer might introduce a new piece of information in the middle of the case.  They will analyze how you rework your solution and analysis according to the new information.

Maturity: Employees will be of all age ranges.  The interviewer is testing your ability to interact with those that might be a few years to decades older than you.  Avoid childish stories or anecdotes about your old fraternity days.

Intelligence: Simply put, your interviewer wants someone who is quick to learn and pick up facts and ideas.  The case interview shows your employee how receptive you are to the above mentioned factors and how in depth you can go with you own analysis.  Don’t be afraid to ask questions, but avoid asking elementary questions repeatedly.

Which type of case to expect

Most undergrads will be faced with guestimates and brainteasers and open ended questions as employers aware of the student’s limited professional experience.  Whatever case you are faced with, be sure to back up your answer with logic and data.

Strategy

Tips for answering business cases successfully

  1. Take Notes:  If presented orally, you should take notes so you can refer back to data.
  2. Make no Assumptions:  Don’t make assumptions as you are being placed in the shoes of someone in your desired position.  Ask as many relevant questions as you need to obtain an accurate picture of the scenario.  You are not expected to know everything about a case presented for example the industry being described.  The interviewer may not divulge all information, but it never hurts to ask logical questions.  You are also taking charge of the case, displaying your confidence.
  3. Listen to the answers:  In many cases, people get so nervous they forget to listen to what they are being told.  Don’t make a mental list of questions in your head while the interviewer is giving you information as you will be sure to miss some key points.
  4. Make eye contact:  Maintaining eye contact is a sign of confidence and authority.  Eventually if placed in the position, you may have to present your findings in front of a large audience.  Case interviewers want to see that you have the ability to present and take charge.
  5. Take your time: It’s ok to request a minute to collect your thought and take in information.  However, don’t sit silent for 10 minutes as most case interviews (especially those for undergrads) are usually 15 minutes.
  6. Discuss your approach: Don’t keep your logic a secret as this is what interviewers are looking to see.  This allows you to keep your thinking straight and demonstrate your ability to conceptualize complex ideas.  While many are not comfortable with thinking out loud, this is an important part of the case interview.  Employers want to hear how you formulate your thoughts.  It’s also a good insight into your problem solving thought process.  Try practicing at home to minimize fillers.
  7. Summarize Your Conclusion: Don’t lose sight of the main idea.  While you may make great points throughout the case, you want to summarize in the end so clarify your points and recap details of your analysis.  This also keeps things fresh in the mind of the employer.
  8. Remember your objective:  Always remember what you were asked.  People tend to stray as they come up with more and more ideas.  Don’t forget what you were asked.  There is nothing worse than creating a great solution to a problem you were not presented
  9. Don’t get nervous:  Sometimes interviewers may interrupt your analysis with a conflicting point.  There are two reasons for this: 1. They want to see how you defend your point. 2. You are blatantly wrong on a point and they are correcting your assumption (refer back to tip #2).  In any case, don’t get nervous.  Remember, case interviewers are looking for those that work well under pressure.

What about group interviews?

When encountered with this scenario, employers are looking to see how you work with others.  It’s also a great situation to assess your leadership skills.  Listen to everyone’s point and don’t bully other candidates.  While you want to be proactive, you don’t want to come off as too dominating.

How to Think Through the Case

  • Weigh the pros and cons. This allows you to uncover the tradeoffs you’re going to have to make in your analysis.
  • Break down a complex case into simpler parts. 
  • Interpret the numbers you are given.  If presented with quantifiable data, incorporate it into your analysis. 
  • Fill in the blanks.  While questions are encouraged, the interviewer will intentionally leave out information for the purpose of seeing how well you interpret data.  It is up to you to fill in these blanks with educated conclusions.

Types of Business Cases

These are some typical kinds of business cases.  Candidates may be presented with a combination.

  1. Falling Profit Case:  This type of case asks you to explore the possible reasons for a company’s dip in profits.  This case tests your analytical skills and other business concepts such as industry knowledge and understanding of financial statements.
  2. New Product Introduction: You may be asked to recommend a strategy for introducing a new product to the market.  This tests your knowledge on brand management, supply chain, industry knowledge, communication channels.
  3. Entering a new market/Entering a new geographic market: Similar to the new product introduction case, these case types call on your ability to draw on industry knowledge, and market dynamics.
  4. Site Selection: You must analyze the decision to locate a plant at a new facility. This calls on your understanding of global markets, regulatory environments, import/export environment, and labor restrictions.
  5. Mergers & Acquisitions: You must determine whether or not a merger/acquisition is viable.

Preparation

Before attending your interview, make sure to brush up on some business concepts that will prove useful.  Some things to know include:

  • Financial Statements: Income statement, balance sheet, cash flow, and statements of retained earnings
  • Cost Benefit Analysis
  • Net present value
  • Capital asset pricing model
  • Porter’s Five Forces
  • SWOT Analysis
  • Product Life Cycle Curve
  • The 4P’s
  • 2 x 2 Matrix
  • BCG Matrix

Most interviews will be very familiar with these concepts as they are common practice.  Use them sparingly as you don’t want to treat the interview like a classroom.

~Catherine B.

Please visit Vault.com for more information on case interviews…

The Stress Interview

Sunday, November 15th, 2009

business-anxiety

The stress interview can be just that-stressful.  Encountered by many hopeful graduates entering the financial services industry, these types of interviews are made to assess one’s ability to survive under pressure.  In many cases, the interviewer may create a calm and pleasant atmosphere, and then suddenly turn around, asking hostile questions, or ones that may not even seem relevant.  The interviewer is going to expect you to possess the qualities and personality to handle stressful situations with the general logic that those who can’t handle stress interviews can’t handle stressful jobs.

These stressful and hostile questions can be coupled with bizarre and sometimes impossible tasks to test one’s problem solving abilities as sited in William Poundstone’s book, “How Would You Move Mount Fuji: How the World’s Smartest Companies Select the Most Creative Thinkers”.  In some scenarios, an interviewer may ask an applicant to open a window-a simple and casual request.  However, the window cannot open.  In this case, the interviewer assesses how the individual responds to the roadblock, a common tactic employed by the former Lehman Brothers.  A more discreet tactic of stress interviews takes place before questions are even asked.  Employers may ask the individual to take a seat at a long conference table, making note of where the interviewee sits.  According to some Wall Street brokers, lions sit at the head, sheep sit on the side.  Smith Barney was known for asking the famous question of how to measure four gallons of water, in three and five gallon containers.

Sample stress interview questions:

Why do you have such a low GPA?

-          If your GPA is not as high as expected, talk about the other great things you have accomplished such as extracurricular activities, internships, on campus groups, etc.

Why were you fired from your previous position?

-          Be honest as employers can easily find out this information.  Calmly explain your side of the situation and what you have learned from it.

How many taxi cabs are there in New York City at any given time?

-          While there is an actual answer for this, you are not expected to know it.  Questions like this are asked to uncover how you approach a problem.

How do you handle rejection?

-          Talk about an experience and the lessons you learned whether it be rejection from a professional organization, previous job.  Always make sure to emphasize what you have learned from it and how you moved on.

Why were you out of work for so long?

-          Fill in unemployment gaps with useful experiences.  If you took time off to travel, talk about your experiences and the people you met, where you went, and what you saw.  If you volunteered somewhere, talk about that.  Make sure your interviewer knows that while you were not in the job market, you were still filling your time with constructive activities.

Sell me this computer on my desk.

-          Often employers will spring this question on you especially if you are applying for a sales position.  No matter what you say, remain calm and collected as this a tactic employed to test how you act under pressure.

What interests you least about this job?

-          Don’t fall into this trap of naming activities because what you like least, your interviewer might like the most.  Instead, make note of how you are interested in learning all aspects of the business and are open to new opportunities.

What kinds of people do you not like to work with?

-          Employers don’t want people who are prone to conflict.  While people don’t always get along, it is important to reassure your employer that you are a team player and can easily blend in with the company.

Do you feel you are overqualified for the job?

-          If you feel you are overqualified, you wouldn’t be applying for the position.

What do you like least about your current job?

-          Again, don’t fall into the trap of naming certain tasks.  Remain positive about your experiences.

How many manholes are there in the US?

-          Another question you are not required to have an actual numerical answer to, but be creative with how you approach your answer and always use logical reasoning.

Some tips to overcoming stress interviews include:

Don’t be too direct- don’t blame your coworkers, employers, friends, family, etc.  The interviewer wants to see you own up to situations and demonstrate adversity when encountered with a problem.

Stay positive even when asked a negative question.  Turn negatives into positives when asked about previous positions, detailing skills you have acquired that will help you in your new job.

Remain calm and collected.  Interviewers are looking to throw you off and you should demonstrate your ability to cope with the desired position.

~Catherine B.

For full articles and more stress interview questions, check out:

Efinancial Careers, Associated Content, Human Resources, Indobase