This is question you are almost guaranteed to receive in any interview. And although you may think it's a softball question—one easily answered by spouting out a few facts gleaned from a Google search—this couldn't be further from the truth. In fact, the way in which you answer this question may very well dictate how long your interview is, which questions you receive afterward, and whether you receive a job offer or not.
As for what the question is trying to gauge, when interviewers pose this question, they're trying to determine if you're interested enough in the position to research their firm's business, what you researched, and how thorough this research was. In an interview, this question could very well be your first opportunity to impress, so you should grab it with both hands and run with it. And if you don't, or answer it badly, interviewers will likely begin to concentrate on the clock ticking, as well as the work they have piled on their desks.
As for good places to begin your research in anticipation of having to answer this question, start with the web site of the firm you're interviewing with. There, you'll likely find links to social media accounts, the full name of the company, the names of any subsidiaries, a press release section, a blog with firm news, a list of the senior managers at the firm along with bios, and much more. In other words, a firm's web site has a mine of important information.
However, before you dive in too deep, decide what you want to know. You don’t just need information; you need the right information. So, start by making a list of facts you want to know, focusing on those that show you're very interested in the company and want to be a part of it.
Questions that you should be able to answer include: What's the company's mission? What are its products and services? What's it best known for? What's the industry like in which it operates? Who are its competitors? What's its company culture like? How did the firm start? When did it start? What's currently happening at the firm (recent developments)? How has it grown in the last year? In the last five years? Does it invest in its employees' development? Does it offer training?
A good place to start is the "about us" section of a firm's web site. More often than not, it'll tell you how the company started, why it started, and what it has added to the industry. It should also tell you what the firm's goals are, and may even hint at how they're planning to achieve them (and perhaps how successfully they've been so far at achieving them). Of course, you'll also want to look at the "careers" section of a firm's web site. It often tells you what perks and benefits are on offer and how a firm invests in its people. And by browsing all the opportunities currently available, you can gauge how much the firm is growing. Other sections to look at include "history," "management team," "news," "financial information," and "press releases."
Once you have the answers to the aforementioned questions, and filed through the aforementioned sections of a firm's web site, you should have all the information you need to put together an enthusiastic monologue when asked what you know about the company. And a good way to think of your monologue (your answer) is to try and sell the company back to the interviewer. Tell your interviewer which company events, products, and services you've been impressed with as of late. Tell your interviewer that you recently saw that they bought X company, did Y deal, and why you thought these were good moves and will improve the firm's already strong offerings. Tell your interviewer you recently saw an interview with the CEO or the COO and found it interesting that the firm is now doing Z.
In other words, tell your interviewer about your positive impressions of the firm (what impressed you during your research). And no matter what you say, don't say anything that you don't actually believe. Which is to say: don't lie. Your interviewer will be able to pick up on that, and then all of your research will have been for naught.
Like many interview questions, there are lots of potential subtexts that might start running through your head when you hear this one come out of an interviewer's mouth. Are they trying to get me to dish the dirt on my current employer?
The number one mistake candidates make when answering this question is translating the question to something akin to, "Tell me everything you've done in your professional career in chronological order. " If you approach the question this way, most of the time it results in a bloated, rambling picture of your accomplishments, even if you've done a lot of impressive things.
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