Interview
Table of Contents

interview sum

StoryofWind.com

When you are sitting in the headquarters of some of the largest companies in the world, talking to senior managements in their offices, or facing a whole strategy team in a boardroom, would you be able to manage the topic flow to demonstrate your value? How can you prepare for the toughest questions and convince the interviewers?

This article summarizes the strategies I have applied for the interviews to corporate finance and strategy positions. My spotless track record may show that as long as we are well prepared, we would always be able to do a good job in the interviews.

1. Preparations - It's an Art

Step 1. Annual Report/10K - a first look at the company

10K is lengthy, but the starting two sections could well serve as a starting point to understand their business and recent developments. So sit back, relax, and let the CEO's welcome message and CFO's open remark guide you to a nice two-hour tour to the company.

Deion of Business
Management Discussion and Analysis of Financial Condition and Result of Operations

Step 2. Wall Street Research Reports - where your in-depth research begins

The reports could be obtained from various public sources such as Themarkets, Reuters, or Investext. Most business schools have subions to one or more of these vendors. Talk to your librarian about brokerage reports. Read reports by multiple investment banks covering the firm. Focus on the key developments and major challenges. Understand their analysis on financials with an emphasize on growth and ratio trends. For strategy position focus on competitive positions - the dynamic changes in market share and competitors' possible response to our corporate strategies. Compare opinions by each of the banks, synthesize and develop our own opinions.

We have done hundreds of case analyses. It's time to spend three times of energy on the company we are interviewing with.

Step 3. (which is to be done with 2) Ratios Analysis and Industry Research - time to stand out from the crowd

Download financial statements in Excel format from the corporate website. Conduct ratio analysis, spot interesting ratio movements, and find out the reasons, eg. new business lines, geographic market strategy adjustments, squeezed energy supply, or major M&A activities.

The margin and return ratios are the most important ones to look at. Wall Street reports will help you understand and reason the trends. If you could not figure out some of the ratio changes, they could well serve as a point to discuss during the interview. Interviewers love to see you show initiative and ask insideful questions, as long as you have some research done about it.

To prepare for an interview to treasury departments, you may also want to perform your own financial forecast and equity valuations using DCF and Multiples.

To assist my preparation, I developed a flexible forecasting and valuation package, which is accessible from
http://www.storyofwind.com/Articles/Equity%20Valuation.xls

Ratio trends are also available on MSN Money and Yahoo Finance.
http://moneycentral.msn.com/investor/invsub/results/compare.asp?Page=TenYearSummary&Symbol=IBM
Click on the menu on the middle-left for margins and return ratios.

2. Books and Materials

We can't start our research without a solid background knowledge in financial analysis.
Here are some really good literatures for a quick review on corporate finance:

Financial Statement Analysis - Stickney chapter 5 (9th edition).
Financial Planning and Cash Management - Ross chapter VII (6th edition)
Financial Forecasting and Equity Valuation - McKinsey Model for Valuation of Companies, L. Peter Jennergren

Strategy - What Is Strategy, Harvard Business Review, Michael E. Porter
- Consulting Theme Cards, Job Juice

3. In the Interview Room

Wear your suit straight, shirt tight. While demostrating the best part of your background, gear the topic from you toward the firm, eg. the position, their financial performance, and the market. Show them the analysis your have done, discuss the findings (eg. your ratios analysis, valuation results), ask them questions. That's what they are looking for.

When answering scenario questions, keep in mind that profit is ultimately driven by sales, costs, and scale.

The general guidelines for organizing your answers:

To discover corporate problems, use Porter's Five Forces for the external environment.
1. Competitive positioning
2. Customers
3. Suppliers
4. Barriers to Entry
5. Substitutes

For certain industries (eg, basic material/energy) regualtory eniromnent also plays a significant role,
so be sure to take it into consideration

More on competition positioning because it's importatnt:
1. Scales/Intensification
2. Market Segmentation
3. Consolidation
4. Innovation
5. Dynamic Trends

For financial service firms, make sure you are awared of the recent Fed fiscal policies and how it may affect the yield curve, the firm's asset/liability, and the short/long term profits.

Internal enviroments

Sales - the 4P's:
1. Product Line/Mix
2. Pricing
3. Promotion
4. Place/Distribution
Cost - the company's value chain:
1. Opereation Efficiency
2. Capacity
3. Outsourcing
4. System Integrations

Possible strategy provisions are
1. Merger and Acquisition
2. Divestures/Spin Offs/IPO
3. Joint Ventures
4. Alliances
5. New Markets Entry (Geographically/Business Lines)
6. Diversification

Always follow a root cause analysis, focusing on the 80-20 rule, and compose your analysis in a logic tree structure.
The interviewer will be impressed to see you lay out your answer in such a well-structured manner.

I found analysis on ratios and competitive positions the most effective way to show your understanding and interest in the firm. Most candidates, and even the employers themselves often focus too much on their own business and neglect the actions and strategies taken by the competitors in the industry. Points on the dynamic nature of the competition is an out-of-box thinking that could really impress the interviewer. Industry research requires substantial efforts, however. Make sure you have gained sufficient understanding the company, which comes in at a higher priority, before starting the research on the market as a whole. My background as a large cap equity research analyst really helped in the research, but it still took me so much time, even when the firm was in the industry I covered.

4. Behavioral Questions

Finally, for behavioral questions, prepare two instances for each of these three most-often-asked topics

Leadership

- manage a complex task force, develop goals, manage a tight project timeline, or assign people efficiently
by skill sets

Teamwork

- work with people internally and externally (cross department / with client team), solve conflicts and develop
relationships, focusing on project goals

Problem Solving

- frustrated but make it finally, learn a great deal. With the experience, should we face a similar situation
again, the issue would be handled so smooth just like flying in the wind.

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