Business Basics

What is a Case Interview Question?

2008-11-22T23:47:00.000-08:00

A few days ago I attended a case interview workshop at our school’s career center and I thought it was a great learning experience. A case interview is a type of job interview question that allows you to demonstrate your ability to solve a problem. It is usually used by business consulting companies to see how well you are able to solve a situation under pressure. These questions are a lot different from what most people will experience in their interview. Nevertheless, I thought that it would be a great idea to share some case interview questions to show what they are like.

Vault Guides have great tips for mastering Case Interview Questions

The case interview question usually does not have a definite “right” or “correct” answer. Instead, the question is given to allow a person to demonstrate their ability and process in solving a situation. The interviewer is more interested in the steps that led up to the final answer than the answer itself. Usually, the interviewer only gives the candidate very little details of the problem so that the candidate can ask questions. For example, if the question was, “Why did the chicken cross the road?” the candidate may ask questions such as “where is the chicken?” The point for asking questions is to see what direction the candidate is going down to answer the question. Therefore, there are technically no wrong questions to ask as long as it is relevant for answering the question.

Case interview questions are difficult and nerve-racking, however, staying calm is essential to think through all the possibilities for answering the question. The questions asked are usually not very complicated, instead the questions can usually be answered with common sense, logic, and “thinking outside of the box”. Here are a few sample case interview questions, try to answer the questions as best as you can:

1. How many phone booths are in New York City?

2. Why are manhole covers round?

3. The client is a U.S. biotechnology company with one product on the market ($500MM in sales). The product is used by dialysis patients, so the target audience in nephrologists. In 6 to 12 months, the company is planning on introducing a new product to the market. The new product is for cancer patients, so the target audience is oncologists. There is one major competitor for the current product and if new product is introduced within a year, there will be no competition for at least one year. The current sales force is comprised of 100 sales representatives. Most reps joined the company to be in an entrepreneurial environment and have been selling only one product for the past 5 years. To successfully introduce the new product to the oncology market, the company will need to invest money in expanding its sales force.

The first question is usually asked to see the candidate’s ability to think logically and process numbers. The second questions is usually asked to see the candidate’s creativity and analytically. The third question is a business case question that allows the interviewer to see the candidate’s decision for answering a company’s dilemma.

Case interview questions are difficult, therefore, researching and practicing is essential to doing well in a real interview. There are many books and advices online of prior case interview questions. Studying them will help one understand the concept of thinking strategically and logically to answer the questions asked.

Learning Business Terms

2008-11-16T21:02:00.000-08:00

When I first started watching the news about business and the stock market, I had trouble understanding some of the terminology that the news anchors were using. These business programs on television expect their audience to be adults who have prior knowledge of business. However, I started with just an interest and curiosity about the world of finance. I didn’t take any business courses nor did I have a mentor to teach me. Instead I bought books and used the internet to look up definitions. Moreover, I constantly watched these programs to familiarize myself with the way they talk and the terminology they use. However, after reading this post I hope that you will have a better understanding of what these news anchors are talking about.

This is a snapshot of Maria Bartiromo from CNBC. She is one of the leading reporters for business news.

There are hundreds of business terms that will take years to learn; however, this post will teach you the meaning of the terms that are used more often. In business, there are a lot of definitions that can be used for many different aspect of business. Therefore, try to remember and understand the context that the term is being used for. For example, the term “interest rate” can mean a good and a bad thing for regular consumers. If the bank raises interest rates, borrowing money will cost more. However, if interest rates are higher for your savings account, it is beneficial for the consumer. Knowing the context in which the term is used is essential to understanding the bigger picture of what the broadcaster is talking about.

Here are some few terms that I personally think are important and used often by business news programs:

1. P/E Ratio- This stands for Price-to-Earnings ratio. This term is used to evaluate if a stock is undervalued or overvalued. Its equation is the Price per Share/ Annual Earnings per Share. The Price per Share is basically the price that is currently listed for a certain stock. The Annual Earnings per Shares is how much the stock actually made divided by the number of outstanding shares. The Earnings per Shares shows the actual price that the stock is making and the Price per Share shows how investors (market) is pricing the stock. P/E Ratio typically trade around 10-20. However, if the P/E Ratio is overly high, it means that the stock is overvalued because the market price is higher than the annual earnings per share. If the P/E ratio is low, it means that the stock is undervalued and it is a good time to buy because the company is making a lot more money than what the market price should be at.

2. Leverage- This simply means “borrow money”. For example, if Company A uses leverage to buy Company B, it means that the Company A “borrowed money” to buy Company B. Companies use leverage so that they can capitalize on the amount of cash that they have. Instead of using all their funds to buy one company, they will use leverage to buy five companies. However, leverage may be risky because companies must be able to pay back their interest rates. Moreover, some companies may spread themselves too thin to a point where they are unable to manage their own leverage.

3. M&A/ Private Equity- Private Equity firms are companies that essentially acquire other smaller companies, specifically in the private industry. These companies are not listed on the stock exchange market which means that they usually only have a few investors. M&A and Private Equity are used interchangeably because Private Equity firms practice merger and acquisitions. For example you may hear reports talk about how M&A have been slowing down because of the credit crunch. This has the same meaning if the news said private equity has been slowing down because of the credit crunch.

4. Market- This simply refers to the stock markets. However, when you hear reporters say that the market is up or down, they are specifically referring to the Dow Jones Industrial Average. The DJIA is the weighted index of 30 companies. It is only a sample of the larger market, but it is a good indicator of the direction of the market.

5. Mortgage-backed Securities- This is a recent term that you might be hearing a lot until we get through this economic crisis. Mortgage-backed securities are essentially a group of mortgages that have been sold to banks who then resells them to investors. For example, Countrywide, who gives loans to homeowners, will sell a group of mortgages to Fannie Mae, a mortgage bank, who then sell this group of mortgages to individual investors telling them that these group of mortgages (houses) are worth X amount of money and still continuing to rise. Investors will then invest in these MBS because the value of the homes keeps going up. However, when the value of these homes starts falling, like the current market, then these mortgages are worth nothing. This is one of the main reasons why we are in an economic crisis. A lot of these MBS were subprime mortgages, which means that the owners of the home did not have good credit but still able to buy a home.

Learning the terminologies for business news is not difficult. However, it will take time and patience to learn the different terms and context that they are used for. One way to learn these terms quicker is to write down the terms that you do not understand and then look it up on the internet later. I recommend websites such as Investopedia.com and BusinessDictionary.com. These definitions are used over and over again so understanding these terms are essential to understanding what broadcasters are talking about. Moreover, you must constantly watch the news to learn new terms. The market changes everyday; therefore, knowing the terminology for recent news is essential to understanding the concept of the topic. I hope that these definitions and explanations have helped you understand some terms of business.

Money Tips

2008-11-10T10:09:00.000-08:00

On November 4, 2008, the United States of America elected Barak Obama to be the next President of the United States. The day after the election, the market dropped 500 points followed by a 400 drop the day after. The question is why investors have such a negative view on the economy.

There are many factors that have investors skeptical about the future of the U.S. economy. One of the main reasons is the rising unemployment rate. Companies across the country are laying off workers because of slowing sales and credit problems. In fact, the unemployment rate has soared to a 14 year high of 6.5 percent and most likely to rise even higher in the near future. In Detroit, auto makers are warning and asking the government for a bailout to continue their operations. If these auto makers, which include GM and Ford, go under, thousands more people will be laid off and other auto related businesses will be tremendously affected.

Barak Obama will have a difficult task when he takes over the office officially in January. He will be faced with a U.S. debt of at least 10 trillion dollars and a slowing global economy.

So what does this mean for current college students and those who have recently graduated?

It means that you should be smart on how you spend your money. Below is a list of tips that you can use as a guideline to get you through these difficult times:

- Choose your bank carefully- make sure you know the details of your account and the different costs/fees that you must pay monthly.

- Watch where your money goes- Make sure you keep your receipts after every transaction. This will help you have an idea of where you’re spending too much money and it will also be very helpful when you check your statement at the end of the month.

- Don’t hang out with big spenders- People in college come from different backgrounds. Try not to hang out with big spenders that do not worry about their financial situation. Know your limits and don’t be afraid to pass on a dinner.

- Expect the unexpected- Things may go wrong anytime and you must be prepared to deal/pay for it. For example, if your car’s tires need to be changed, you must be prepared to pay for it.

- Use your Credit Card wisely- Do not use your credit card if you are unable to pay for it in the future. Having bad credit and a debt will be very stressful for you in the future. If there is an expensive item that you may want to purchase, save up for it in cash and then pay for it when you have the necessary funds.

These are only a few tips that may help you through this economic crisis. Make sure that you know your own financial limits so that you are not left with a big debt when you graduate. Be smart and spend your money wisely.

Resume Tips

2008-11-02T00:58:00.000-07:00

Def. Resume- A brief written summary of an individual's education, work experience, and accomplishments, usually for the purposes of finding a job.

The resume is one of the most important part of applying for a job because it is the only piece of information that the employer has of you. For first time resume writers, writing a resume can be difficult. People usually do not know what information to include, what kind of words to use, or how to format their resumes. The reason I thought of this post was because my friend asked me if I could look over her resume and I noticed a few things that I thought was worth mentioning.

I have written my own resume numerous times for different jobs/internships and seminars. Moreover, I am part of a professional business fraternity and I have also consulted the school career center, working individuals, and recruiters about my resume. I have had internships at a private investment bank and a hedge fund. Furthermore, I have continuously written and submitted cover letters for jobs/internships throughout my college career. Although I am not a professional, I think I have the experience to teach you the basics of how to write a resume.

Your resume should be divided into 3-4 sections which include:
1. Education- this should include your school name, current major, current overall/major GPA, and expected graduation date.
2. Work Experience- this section should include previous jobs/ internships that you have held and a brief description of your job duties.
3. Activities/Awards- this should include any clubs, volunteering, or awards that you have received. Remember to include any leadership positions that you may have had in a club.
4. Skills/Interest- this section should include any language or computer skills that you may have. For example, make sure to include computer skills, such as Photoshop, in this section.

The different sections should be clearly divided so that an employer knows where to find certain information. Generally, the sections should be listed in the order above. In addition, the information that you list in each section should be in chronological order from most to least recent. There are a few more things to be aware of when writing your resume:

1. Format- The way you format your resumes is very important because it is the first thing that employers notice when they look at your paper. Make sure that your resume is formatted in a way so that it is easy to read. Do not leave too much white space (blank space) on your resume. For example, try to write your descriptions so that it fills up one line on the page. Try to not have a sentence that only has two words on the second line.

a. Bold- Bold the company/organization name as well as your position.
b. Bullet Points- Use bullet points when writing the description of the position. This makes it easier for employers to read your resume. You should have 2-3 bullet points for each position/organization. Try to keep your bullet points consistent. For example, if you used three bullet points for one position, use three bullet points for all the other positions. Do not use three points for one position and then six points for another position.
c. Font- Use a font that is easy to read and professional at the same time. Times New Roman is a good and safe font to use, however, I personally like to use a different font to make my resume stand out and easier for employers to go back and find my resume if they need to.
d. Length- Keep your resume to ONE page and ONE page ONLY. Do not exceed one page. Either delete information that does not relate to the job you are applying for or fix the margins. Do not change your font size below 11. Employers only spend 1-2 minutes on each resume, therefore, if it is difficult to read or if it is too long they may not take the time to read it.

2. Description/Writing Style- The description is the most important part of your resume.
It is the only way for employers to know what your past experiences were and your capabilities. Therefore, you should use actions words and specific examples in your description.

a. Action words- Try to use action words to start your sentences. For example, instead of saying, “I worked with a team to increase sales”, use an action word at the beginning of the sentence and say, “Collaborated with a team to increase sales.”
b. Specific Examples- Use specific examples in your description so that it gives employers a better idea of your previous experiences and qualities. For example, instead of saying “I worked with a team to increase sales”, make it more specific and say, “Collaborated with a team to create a marketing plan to increase online sales.”
c. Numbers- Quantify your descriptions. You do not have to use numbers on every point, but try to use it in at least one point per position. For example, instead of saying “I worked with a team to increase sales”, add a number to give your employer a better idea and say, “Collaborated with a five member team to create a 15 page marketing plan to increase online sales.
d. Titles- Position titles can be tricky if you’ve had a job that did not have a title for your position. In addition, titles can be tricky because you may want to give yourself a title that sounds a lot better than the job functions that you actually had. For example, instead of saying “Secretary”, you can say, “Executive Assistant”

Below is a sample from my own resume. (The margins on Blogger is different and is the reason why there is white space showing.):

JOHN SMITH & COMPANY LLC, Irvine, CA Feb 2008 - June 2008
RESEARCH ANALYST INTERN
• Explored investment opportunities in collaboration with deal leads and participated in the due diligence
• Collaborated with directors and research analyst to develop different investment strategies for the healthcare industry
• Conducted analysis of industry trends and competition for potential merger and/or acquisition candidates

JOHN SMITH INTEL SOURCE, Irvine, CA Sep 2007 – Jan 2008
PROCESS EXCELLENCE INTERN
• Managed the transfer of incoming inventory from containers to trailers to be sent to different accounts
• Responsible for over $10,000 worth of merchandise to arrive and be delivered within a certain time frame
• Coordinated and supervised a team of five employees to work efficiently to expedite the process of trans-loading

Writing a resume takes time and practice. These are only a few things that I hope will help you begin your resume. Remember that your resume is supposed to tell employers about yourself. Don’t be shy and glorify yourself. Just remember to be professional and concise with your writing. Make sure that when you are writing your resume that you are describing the things that you have done at your previous job and not an overview of your past company. There is a big difference between the two because one describes yourself and one describes the company.

Have people correct and proofread your resume when you are done. There is nothing better than other people’s advice for improving your resume. Perfecting your resume will take time; however, having a strong resume will help you tremendously in the future. I hope this post has helped you and have fun writing your resume!

My Five Rules of Blogging

2008-10-31T17:24:00.000-07:00

Blogging is a new and exciting way of writing for me. I’ve always heard about how fun and easy it is to blog, but I never actually tried it until now. I’ve read hundreds of business blogs from people of different backgrounds, but I never thought that one day I would be on the other side with them. Although I have just recently started my blog and in the process of finding my specific niche, I have some few general ideas and rules that I will try to follow.

If you look at my two postings, the topics and the way that I write in the blogs are very different from each other. This is because I am still trying to find my audience and convey to them the information that I know. In the first posting, I write about the current market conditions and an overview of what happened in that past week. I write some of my opinions, but mostly it is a basic summary of market events. This will works well with people that will only look at my blog for business news, but most of the time they can find the same information in more detail on Yahoo Finance. In the second blog I wrote more to a college audience, which is what I am. I was thinking that I can answer some of the concerns that some of my friends and I have about business, more specifically, finding a job. This works better for me because it is a niche that I understand and can write about. I plan to think of more topics that college students might be interested in or have questions on and blog about it. I have had previous internship experiences at an investment bank and I am also part of a professional business fraternity. With these two backgrounds, I hope to share the necessary information to have a successful blog. However, there are a few rules that I will follow to keep my blog consistent and professional.

1. Business Related- All the postings that I will write will be business related. However, since business is such a broad word, I have decided that I will write about business topics that are aimed towards college students. This will include important news that I think will affect college students in the present/future, tips on business after graduation, how to present yourself in a professional environment, etc.

2. Support the Information- In my blogs I sometimes make references to certain news. For example, I wrote that Pepsi and EBay cut workers. I plan to back that specific news with links so that it is professional and accurate.

3. Writing Style – Since I am writing to a college audience, I want to keep my writing personal yet professional at the same time. For example, instead of saying “hedge funds may be the source of our economic crisis because they use short selling, derivatives, leverages, and underliers.” I would say that “hedge funds may be the source of our economic troubles because of risky investments. Then I would link “hedge fund” to a webpage. This keeps things concise but informative at the same time.

4. Teaching or Opinion- The post must give something to the audience. Meaning, the post will not be a summary of a different article. It will have either my opinion in it or information that I am sharing.

5. Update- The post must be updated frequently. This is because business decisions and news takes place everyday. Therefore, it is necessary for me to either write about that issue or write about something that relates to it.

Job Hunting

2008-10-26T22:11:00.000-07:00

One question that every college graduate has on their mind is how they are going to find a job after graduation. With this economy, college graduates are now questioning if it is even possible to find one. Corporations are cutting thousands of jobs each quarter to strengthen their balance sheet. Moreover, small businesses are hiring fewer people because they do not have the capital or the credit needed to keep the extra worker. The economic crisis is affecting every industry in our economy. Low sales and tighter credit means that companies essentially have to let people go because they’re just not making enough revenue to support a large number of employees. EBay and Pepsi recently laid off thousands of workers because of low profits and lack of sales. Merrill Lynch is expected to lay off thousands of workers because of their recent merger with Bank of America. In addition, Chrysler announced that it will cut 5,000 salaried jobs and lay off 1,825 other workers because of low sales and tighter credit.

So the question now is, with these economic conditions, how are college graduates going to find a job?

Although it is going to be difficult, there are a few things that may help you find the job of your dream. For example, the University of California, Irvine, recently had their yearly "Fall Career Fair" where over a hundred different companies come onto campus to recruit prospective graduates. This is a great program and opportunity to meet recruiters and find out more information on what they are looking for. Moreover, it gives one a chance to connect with the recruiter and personally hand them their resume. Recruiters are there to seek potential workers, so making a good impression with them is a key to receiving a further interview. Here are a few things that you can look out for when meeting and talking to a recruiter:
1. Appearance- When you attend any kind of company recruiting event, you should always dress professionally and look clean. This means fixing your hair, shaving, etc. For men, they should have on a black/dark grey suit, white dress shirt, and a dark conservative tie. Women should have on a two piece suit, conservative blouse, dark shoes, and conservative jewelry.

2. Resume- The resume is a very important part of telling the recruiter who you are. Therefore, you should have a clean resume that is free of grammatical errors and formatted neatly. One thing that you should do is have someone proofread your resume. Moreover, you should use a lot of action words to describe your previous job functions/activities. For example, instead of saying, “I worked with my group member to create a marketing plan.” You can say, “Collaborated with a five member team to formulate a 15 page marketing plan for numerous corporate clients”

3. Greeting- When approaching a recruiter, always smile at them and give them a firm hand shake. Introduce yourself briefly and proceed with your questions. Try to make the conversation you have with the recruiter a two way conversation. At the end of your conversation hand them your resume, thank them for their time, and ask for their business card.

4. Business Card- After asking for their business card and thanking them for their time, write down 2- 3 things from your conversation on the back of their card. This is so that you can email them back after the event and mention the things that you talked about with the recruiter. It makes things a little more personal and makes you stand out above the others.

These are only a few things to remember when you have the opportunity to meet with different recruiters. Just remember these few advices and with hard work and determination, finding a job should be less stressful as you may think.

Are We Safe Now?

2008-10-16T18:11:00.001-07:00

On October 13, 2008, the Dow Jones rose a record breaking 936 points in one day, its biggest rally since 1933 and breaking the previous record rally of 499 during the days of the technology boom. This all happened because the government revealed its plan to inject 250 billion dollars into the U.S. banking systems. This plan is suppose to give banks confidence to continue their vital business of lending. However, what does this all mean to the ordinary working person? Are we safe?

The answer is no. We are not safe at all. The market went down 77 points the day after the record breaking rally, followed by another 400 point drop the next day. This means that investors were taking some of the profits to strengthen their books and it also shows that investors do not have confidence in the American economy. Although the government is taking steps to try to restore confidence in the economy, it is still not enough. 250 billion dollars cannot offset the 2.4 trillion dollars that has been lost in the past few weeks. Henry Paulson said that “this will take time and there will be challenges” in the upcoming years and he’s right. The problem with the economy goes beyond that of the banking system. It has become a problem with consumer confidence. This is something that even the best governments in the world cannot directly fix. Unfreezing credit lines is a must to give people the opportunity to borrow money; however, everyone is scared to make a move right now. With their home value dropping, people feel like they are losing their most important and most profitable part of their lives. They stop spending money else where and the whole economy begins to shut down.

Pepsi recently announced their disappointing third quarter earnings and have decided to cut 3,300 jobs. EBay also announced that they would cut 10% of their workforce a few weeks ago. These job cuts show the enormity of this crisis. Unemployment is at an all time high while everything around us is getting more expensive. If the government thinks that spending 700 billion dollars is all we need to get us out of this crisis they need to rethink their plan. There are still homes, office buildings, land and other soured assets that are in tremendous trouble. Moreover, the recent housing boom has created an over supply of homes that will take years to fix. These assets will continue to hurt the economy unless we restore confidence in the consumers and adjust these home values. There will always be ups and downs in the economy, but its how we deal with the problems when its down that shows how strong the economy really is. The United States has taken steps to solve these on going problems, but unless they solve the housing and sub-prime mortgage problem, we will not be safe.