Benchmarking involves comparing a particular piece of data with other relevant data in order to contextualise your findings. Benchmarking can be essential if you want to gain a clear picture of a company’s true standing/circumstances. As far as the quantitative nature of the analysis is concerned, it is very important to bear in mind the importance of benchmarking different types of data.
Benchmarking against the industry often allows you to determine whether a problem faced by a given firm is a result of its potential mismanagement or relates more to an industry-wide issue. For instance, if you are told the profit of Company ABC has increased by 15% over the course of the past year, this does not necessarily indicate that the company’s performance was strong in the context of its particular industry. You should compare this metric to industry averages. If profit within the industry as a whole increased by an average of 5%, then Company ABC has performed comparatively well. If however the industry wide average stands at 50%, the company’s performance may be highly disappointing for investors and may stem from internal issues such as mismanagement.
Similarly, when provided with information on how the company’s profits have evolved over the past year, it is important to analyse this information in light of company data from previous years. For instance, a positive profit figure for a given year does not necessarily mean that a company is in a good financial shape or performing to the best of its abilities. If it incurred heavy losses in all the previous years, it may still be financially unstable. If its profit figure was substantially higher in previous years, then it may no longer be performing at the fullest of its capabilities, suggesting assets are being under-utilised.
It is important that you adhere to a clear structure throughout the case. When opening the case and presenting your framework to the interviewer, you should reverse the piece of paper (assuming you have written out the framework) so that it is easier for the interviewer to understand and follow the concepts you are referring to. Similarly, when moving from one branch to another and drilling down each branch in the case analysis section, you should aim to do the exact same thing. A case interview is supposed to mimic an actual consultant-client conversation and as such the interviewer’s understanding of your thought process is absolutely essential. For this reason, you should always use clear and concise language to explain all the concepts, as clients may not understand more technical explanations and will likely be put off by jargon.
Finally, whilst gathering data from the interviewer, make sure you keep it all in order so that you know where to find particular information quickly throughout the interview (for instance, in case you are unexpectedly asked a specific question relating to the case). You will often find yourself bombarded with a lot of information in an interview. Failing to organise the data you receive (and your thoughts) effectively may lead the interviewer to think that you lack the ability to effectively organise, process, analyse and present vast quantities of information whilst under pressure.
By Jake Schogger - City Career Series