Case Interview Fundamentals: Lesson 12 [Drill: Canadian-American border consumption leakage] — Transcript

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1. 0:00Hey there, so this is an interesting
2. 0:02brainstorming case because it's not that
3. 0:04hard, but it's public sector, it's
4. 0:09different from everything people have
5. 0:11seen, the metric is weird, so a lot of
6. 0:14people get into trouble in this one.
7. 0:16It's about Canadian-American border
8. 0:18consumption leakage. So, let's jump into
9. 0:20the case question. Canada's seeing a
10. 0:23significant portion of its citizens
11. 0:25consumption in durable goods, so
12. 0:28electronics,
13. 0:29clothing, things like that, leak to the
14. 0:32USA. So, most Canadians live close to
15. 0:35the US borders, uh and most goods are
16. 0:38cheaper in the US side of the border, so
17. 0:41a lot of Canadians go to the US
18. 0:43frequently just shop, just shopping
19. 0:45trips, and this makes consumption in
20. 0:48Canada uh obviously lower.
21. 0:51What are things that the government of
22. 0:53Canada can do to reduce the impact of
23. 0:57this behavior? So, in other words, how
24. 1:00to stop Canadian consumption to leak to
25. 1:04the American side of the border?
26. 1:06So, just a quick note here. This could
27. 1:08easily be the question that prompts the
28. 1:11start of the case. So, you get into the
29. 1:12interviewer's room, and that's the first
30. 1:15thing they ask,
31. 1:17uh this case question. So, why is this
32. 1:19not a framework question then? Well,
33. 1:22because they're not asking you to help
34. 1:24them make a decision or to come up with
35. 1:27a plan, they're merely asking you to
36. 1:30come up with a list of ideas, that is to
37. 1:32brainstorm a list of ideas. There are a
38. 1:35lot of similarities between
39. 1:37brainstorming questions and framework
40. 1:39questions, and honestly, if you can do
41. 1:41both, it doesn't really matter because
42. 1:44they're both structuring questions. So,
43. 1:47uh if this is a bit confusing to, uh
44. 1:50it's not a big deal, just learn
45. 1:52brainstorming and learn frameworks. The
46. 1:54difference is brainstorming is
47. 1:57organizing in a structured way a list of
48. 2:00ideas and hypothesis, and frameworks are
49. 2:04creating a plan to do something or to
50. 2:08decide something. So, it's more like a
51. 2:10decision-making plan, while brainstorm
52. 2:13is just a list of ideas or hypothesis.
53. 2:16Now, it's not rare for a case to start
54. 2:19with a brainstorming question and then
55. 2:21move on to a more specific decision, or
56. 2:23in some cases, sometimes by uh partners,
57. 2:27even not move on to specific decision,
58. 2:29and the whole case is just
59. 2:31brainstorming. So, it doesn't really
60. 2:33matter. A case can start with a
61. 2:34brainstorming question, with a framework
62. 2:36question, or even an estimation, or a
63. 2:38chart interpreting question. It doesn't
64. 2:41really matter much. Okay, now let's move
65. 2:43on to this brainstorming question. Let's
66. 2:45try to solve it. Take your time
67. 2:48to structure and generate ideas for this
68. 2:50case, and then watch my own answer.
69. 2:54Let's break down a dropping consumption
70. 2:57leakage. So, what could the government
71. 2:59of Canada do to reduce leakage in
72. 3:03consumption, to drop consumption
73. 3:05leakage? And I'm going to define this as
74. 3:08the amount of dollars spent in the US by
75. 3:11Canadians on quick cross-the-border
76. 3:14shopping trips. Now, it may be hard to
77. 3:16measure that using actual data, but it's
78. 3:19a useful concept because I don't want to
79. 3:21call this uh
80. 3:23stuff that Canadians buy when they're,
81. 3:25you know, visiting the US on travel or
82. 3:29on work travel or tourism or things like
83. 3:32that, because then, you know, every
84. 3:34tourist buys stuff. I just want to know
85. 3:36what happens in these short shopping
86. 3:38trips. And I think there's two main ways
87. 3:41to do that. The first one is to improve
88. 3:43shopping in Canada, and the second one
89. 3:45is to indirectly, because you can't do
90. 3:48it directly, worsen the buying
91. 3:50conditions in the US. And there's a
92. 3:53couple levers for each one. To improve
93. 3:55shopping in Canada, we can reduce
94. 3:57prices, or we can improve the shopping
95. 4:00experience. I don't believe this one too
96. 4:02much, but I mean, it's logical, it's
97. 4:06there, right? And to worsen the buying
98. 4:08conditions in the US, we can make it
99. 4:10more expensive or make it more time
100. 4:13consuming. These are the two ways I can
101. 4:15think of
102. 4:16that we can indirectly worsen the buying
103. 4:19conditions. We can't affect American
104. 4:21policy directly, so I have to to to do
105. 4:25what we can, right? So, let's start with
106. 4:27reducing prices in improving shopping in
107. 4:30Canada. The one way I can think of here
108. 4:34as a government is to reduce taxes. I
109. 4:36mean, in the long term, you can try to
110. 4:37be more competitive,
111. 4:39be more productive, and so on,
112. 4:42but in the short run, you can reduce
113. 4:44taxes. And because Canada is a welfare
114. 4:49state to some extent, we may not want to
115. 4:53reduce government revenue, so we might
116. 4:55need to shift these taxes to other types
117. 4:58of taxes, for example, property taxes or
118. 5:01financial transaction taxes or income
119. 5:04taxes, but not consumption taxes,
120. 5:06because if our products are more
121. 5:08expensive due to consumption taxes,
122. 5:12then we're not going to collect these
123. 5:14taxes anyway. We're just going to send
124. 5:16them to the US, which is not ideal
125. 5:18either.
126. 5:19Now, to improve the shopping experience,
127. 5:22we could work on the assortment or the
128. 5:25product quality or the store quality. We
129. 5:28can't work on these things directly as a
130. 5:31government, so I don't think it makes a
131. 5:33lot of sense, but I'm just mentioning
132. 5:35here
133. 5:36uh for the sake of. Now, let's move on
134. 5:39to indirectly worsening the buying
135. 5:41conditions in the US, and I think we
136. 5:43have a lot more options here. So, we can
137. 5:46make it more expensive. We can impose
138. 5:48tariffs or limits to spend. We can
139. 5:52control the current limits better. So, I
140. 5:54assume that Canadians uh have a certain
141. 5:58amount of
142. 6:00dollar amounts that they can spend
143. 6:02abroad or in the US per trip or per
144. 6:06citizen,
145. 6:08and we can uh raise these tariffs or
146. 6:12these limits or lower these limits to
147. 6:15spend, or we can control them better.
148. 6:17Maybe we have these limits, but no one
149. 6:19really follows them.
150. 6:21Uh the border is not really caring too
151. 6:24much, and we can impose more controls.
152. 6:27To make it more time consuming, which is
153. 6:30the other lever, it would be to
154. 6:33artificially increase border crossing
155. 6:35time. So, just to give you an example,
156. 6:37I'm guessing that these people go to the
157. 6:39US because it's convenient, not only
158. 6:41cheaper, but also convenient, right?
159. 6:44It's easy to do. Uh maybe they can go
160. 6:46once a week or once a month and buy even
161. 6:49groceries. I don't know what they're
162. 6:50buying there. If they're buying stuff
163. 6:53recurrently, if they're going there
164. 6:55frequently, we can increase the border
165. 6:57crossing times, either to everyone,
166. 7:00which wouldn't be ideal, or to people
167. 7:03who have shopped for stuff. Maybe by
168. 7:06having uh agents uh search their cars,
169. 7:10or maybe search is a
170. 7:12a strong term, but to to go through
171. 7:14their shopping and to fill out forms and
172. 7:17stuff like that. It's not really the
173. 7:19best solution, but
174. 7:22it could work. I mean, maybe they're
175. 7:24just going there because it's so
176. 7:26convenient, it's so close. I honestly
177. 7:28don't know how close it is because I've
178. 7:30never lived there,
179. 7:32but if it's really close, maybe less
180. 7:34than an hour away, maybe people are just
181. 7:37going there because it's not only cheap,
182. 7:39but also convenient. Now, one thing to
183. 7:42notice here. I finished my answer, and
184. 7:44and these are my ideas and my structure,
185. 7:47but one thing to notice here is that
186. 7:50context matters, right? I'm not
187. 7:52American, I'm not Canadian,
188. 7:55and so the interviewer isn't expecting
189. 7:59too much of me because I I don't have
190. 8:01all the context, right? I can't know a
191. 8:04lot of stuff. So, the way they see this
192. 8:06answer from me
193. 8:09is is good for me, but if you're
194. 8:11American, if you live close to the
195. 8:13border of Canada, if you if you're from
196. 8:15Vancouver or something like that, then
197. 8:18they'll probably expect a little bit
198. 8:20more.
199. 8:21I once did a case at Bain. Uh it was on
200. 8:25an uh fashion uh brand trying to or
201. 8:29willing to open an e-commerce store. And
202. 8:33when I was interviewing, my last job was
203. 8:37at an uh venture capital focused on
204. 8:40e-commerce. So, the interviewer saw that
205. 8:43on my CV, and she said, "You know, I'm
206. 8:45going to expect a lot of
207. 8:47uh depth and and knowledge from you in
208. 8:51this case because you should know this
209. 8:53stuff, all right?" And I said, "All
210. 8:55right." And we discussed a lot of the
211. 8:57things in much more depth than the
212. 8:59regular candidate would. I passed the
213. 9:02next round, but it wasn't because I had
214. 9:04worked on that before. This was probably
215. 9:07bad for me because she was expecting
216. 9:09that much more. So, this is just a
217. 9:12comment on what interviewers expect.
218. 9:14They take context into consideration,
219. 9:17and if you're Canadian or
220. 9:20American, and you live close to the
221. 9:22border of Canada, and you could think of
222. 9:24three or four uh more things
223. 9:29compared to what I did, and you're
224. 9:30saying, "Oh, you you missed this really
225. 9:32obvious thing," then just bear in mind
226. 9:35that if this case was about the border
227. 9:37of India and Pakistan or the border of
228. 9:40Brazil and Argentina, then you probably
229. 9:43wouldn't be able to
230. 9:45to think of those nuances. So,
231. 9:48context matters. If you're knowledgeable
232. 9:50about something, if you had experience,
233. 9:52work experience, life experience on that
234. 9:54something, then the interviewers are
235. 9:57going to be tougher on you. Okay? So, I
236. 10:00hope this was useful to you. I hope
237. 10:01you've learned more about how to
238. 10:03brainstorm with structure, with some
239. 10:06prioritization, and I'll see you in the
240. 10:07next one.