A major airline is considering the purchase of 24 new planes. They are unclear how this purchase will affect their business performance in the short term as well as the long term. You are the Senior Consultant meeting with the Operating Committee for the first time. I am the Chief Operating Officer of the company. What would you need to know from me in order to assess the situation?
Here is a good example of a directed question combined with a role-playing exercise. Not only will the interviewer be assessing your analysis and deductive abilities, but she will also be evaluating your poise and professionalism in front of a senior executive. In many cases, consultants find themselves in front of key client personnel who are older and more experienced in the industry, so your ability to cope with this type of situation is essential. How will you actually go about assessing the situation and finding information once you arrive at the client? (This case was given to an MBA-level candidate.)
You: What is the planned delivery cycle of the new aircraft? Will it be staggered, serial, or all at once?
Interviewer: Aircraft will be delivered as they are manufactured over the next five years, at approximately four per year.
You: How many planes are in the current fleet? Are there any plans to sell off older aircraft as the newer aircraft are delivered?
Interviewer: There are 120 planes in the current fleet. There are no plans to get rid of our older aircraft as the new ones arrive.
You: What is the current average cost per flight-hour of the fleet?
Interviewer: It varies by aircraft type. The range is anywhere from $1,000 to $5,000.
You: Do you have any frameworks in mind for assessing this situation?
Interviewer: No, what would you suggest? (This is a tough response because it asks you to put a stake in the ground.)
You: Well, in many cases I have used a company's cost of capital, relative to the average cost of capital in the industry, industry-specific metrics like the cost per flight-hour, as I already mentioned, and depreciation method choice. I would also want to assess the new efficiencies brought about by your purchase, as in fuel cost savings, increased passenger load, and so on. Do these sound reasonable to you?
Interviewer: Yes, as a beginning. How will you go about finding the information you need?
You: I would first need to know appropriate contact people in purchasing, finance, and accounting who could provide the quantitative facts I need to perform the assessment. With your introduction, I would like to meet with each of these people from two hours to a half-day in order to gather the information. I would need to circle back through each of them after the initial interviews simply to validate the information I have compiled, once I have assembled a draft.
Interviewer: That sounds like a workable plan.
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