Crack the Case. D. Ohrvall

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MVM™

Zone 5

S P E1 C I A L T

Interviewer Notes and Answers

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Interviewer Notes and Answers

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A Logical Flow Using the FRAME Method™ A Logical Flow Using the FRAME Method™

R - Read the Audience

Interviewer: Focus on being the Silent Partner, willing to offer information when asked but only then. There is not a lot of data to distribute so you can give your candidate the test of silence. Note how s/he handles the situation. It is tempting as the candidate to fill the silence with unfocused talking.

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Good Reactions/ Body Language:

•Firm, dry handshake, leaning slightly forward

•High energy

•Consistent eye contact during the introduction

•Warm smile, worn most of the time

•Relaxed manner in small talk and getting situated

•“Ready to talk” body language, sitting on the front half of the chair, eager to discuss the case

Average Reactions/ Body Language:

•Half-hearted handshake

•Average energy

•Frequently breaks eye contact (indicates nervousness or insecurity)

•Forced smile

•A little tense and awkward in getting set up

•Moving around a lot in the chair, leaning or sitting back too far, indicating disinterest or laziness

Poor Reactions/ Body Language:

•Soft, weak or moist handshake

•Low energy

•Little to no eye contact

•No smile

•Awkward conversation; palpable tension

•Sitting completely in the back of the chair; slumping over the desk; putting arms on knees in the football coach position

Candidate Review Sheets

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A Logical Flow Using the FRAME Method™ A Logical Flow Using the FRAME Method™

A– Anchor a Hypothesis

What was your initial hunch? Transfer pricing is not the most common of topics, but there were enough clues for you to build a few thoughts early.

As you begin to work through your plan, use your mental hypothesis as a place to direct your questions. Your initial thought and natural curiosity can give you a focus that many other candidates will lack.

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Potential Hypotheses

So where could you build some initial hunches? After you received the case question you probably had some initial reactions to the situation. Did you suspect that the company is disorganized? Outdated in terms of their policies? Poor at training their employees? Any of these thoughts would have been a good beginning to help you focus your questions. Here are some examples:

Internal Policy Not Employees

“I think that most employees believe that they are acting rationally. I bet that some deals are being rejected due to some policy or something out of the control of the employees.”

Communication

“My hunch is that the procedures are probably appropriate but communication is breaking down for some reason. I’ll expect to see several issues surrounding communication between regions and employees.”

Incentives

“People are wallet driven, looking to fill their own pocket as much as possible. The leaders in the company are doing things that suit their own best interests. As I explore what is going on, I plan to look for opportunities to review their incentive compensation metrics.

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Mining Zones

Deal Rejections

•How many deals are rejected per year because one region won’t support them?

-233 price quotes were cancelled last year due to “regional disagreement”.

•What are the reasons for not supporting the price?

-One region is not achieving enough margin on the deal or has limited capacity, so priority is given to high margin deals.

•Do we have regional policy on profit margin and deal approval?

-Each region must make net 15% on every transaction. Sales people can approve/reject deals.

•Do we have a global policy?

-No global policy. Each region has veto power.

Global View

•How do the different regions work together?

-Cooperation is based on transactions; the manufacturing region transfers parts to the assembling region.

•Where do the regions typically have disagreement with one another?

-Disagreement is almost always based on profitability and who will make more by region.

•How does KTP resolve regional differences when they arise?

-KTP lets the regions resolve their own disputes.

Potential Change

•What global policies or systems has KTP rolled out in the past?

-SAP (global computer information system) was rolled out 2 years ago. There have been no other global rollouts.

•What were the reasons for their success or failure?

-SAP succeeded somewhat, but there were many disputes over universal standards.

•What is leadership’s attitude (by region) toward change?

-Each region wants to rollout their own policies and seldom wants to explore policies developed in other regions.

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Interviewer Notes and Answers

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A Logical Flow Using the FRAME Method™ A Logical Flow Using the FRAME Method™

E– End the Case

What was your final conclusion? Did you have both a data driven set of insights and then some recommendations for moving forward? Keep the following in mind as you conclude any case:

•How would I wrap this up?

•So, what’s my conclusion? In this case, how should I resolve these cancelled deals?

•How can I pull my analysis together quickly and end the case?

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Good Ending: “Kryptonite is turning down a large number of profitable deals every year. In fact, in 2001 the total average net profit from all rejected deals amounts to about 10% of total net profit. To capture some of this money in the bottom line, we need to think differently about our structure. Decentralizing the decision-making for global price quotes and sticking to the ‘Net 15’ rule for every deal doesn’t make sense anymore. I recommend we automate an approval system and have “close call” deals reviewed by senior management. KTP should put a team in place to monitor the rollout of this new process.”

(Excellent use of data. You put a stake in the ground on where to go next. Your calculation of lost profits should catch management’s attention. Good job.)

OK Ending: “Kryptonite needs to focus on profitable deals for the company as a whole. To do this, they’ll need to put an end to the outdated Net 15% policy.

Instead, each deal should be evaluated on its value to the entire company. I suggest that we look into automating the approval system in SAP and have an exception-based review process. Internally, we’ll need to ensure that each region gets a fair portion of the profits from the deal. We’ll need to clearly explain the benefits of this approach to each region head, as they have not been open to corporate initiatives in the past.”

(Nice job thinking through both the problem and the solution. Try to be more quantitative in your wrap-up to show your grasp of the numbers.)

Poor Ending: “Basically our Net 15 policy has to go. We’re losing deals left and right and it is not working for the good of Kryptonite on the whole. Customers will like our new unified approach. As a next step we should move ahead with changing the policy as soon as possible.”

(Nothing you said is wrong, but overall this statement gives a poor last impression. It lacks quantitative depth. Use data, explain your logic and provide realistic next steps.)

Candidate Self Assessment

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Analytics

7. I analyzed the data well on a piece by piece basis.

8. I integrated data well and reached insights (saw the big picture).

Recommendation

9. My final recommendation was to the point and data driven.

10. I was persuasive in making my final points.

Total Score:

(10-60)

Do this self assessment before asking the interviewer for feedback. How did your numeric score compare to the one the interviewer gave you? What is your top priority going forward?

C

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Candidate

•Working with an interviewer: Remove pages 3 through 6 to take notes and do your work. Give the rest of the pack to your interviewer. Interviewer prep is about 10 minutes for this case.

•After the Interview: Rate yourself using the Self Assessment sheet in the back of the case pack. Review the feedback score and comments from your interviewer and discuss ways to improve. Review the suggested answers in the case.

•Self-study: Remove pages 3 through 6 to take notes and do your work. Remove any data handouts and place them face down. Follow the three Self Study Steps listed on these sheets. This self study method will help you form your plan, practice asking good questions and improve your ability to pull insights from the data slides. Keep in mind that you will benefit most from working with a partner who can evaluate your performance objectively.

Throughout these notes references will be made to the MVM™ (Maximum Value Model) and the FRAME Method™, the building blocks of the One Model/One Method™ approach to case interviews. Full descriptions of these unique tools, as well as additional cases, can be found in the book, Crack the Case: How to Conquer Your Case Interviews, available at www.consultingcase.com.