Consulting Frameworks

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Pricing Strategies

"-Competitive analysis: --Are there similar products out there? How does our product compare with the competition? Do we know the competitor's costs? How are its products priced? Are there substitutions available? Is there a supply-and-demand issue? What will the competitive response be? -Cost-based pricing: --Take all our costs, add them up, and add a profit to it. This way you'll know your break-even point. --Usually not a good way to price anything, though, because if you misjudge the market you'll have to cut prices, which will squeeze margins - but the company needs to know what its costs are -Price-based costing: --What are people willing to pay for the product? If they're not willing to pay more than what it costs you to make the product, then it might not be worth making. On the other hand, consumers may be willing to pay much more than you though, and could make more by just adding a profit margin. --Profit margins vary greatly by industry: grocery stores have a thing margin, while drugs have huge margins --Consider what your product will be worth to the buyer. Compare it with similar products or services - what did they pay in those cases? -Partition pricing (extra / extra difficult) --Means that you charge separately for things like delivery, shipping, installation, and warranties, versus bundling everything into one price. ---If you run an airline, do you advertise lower tickets and charge for bags, or do you advertise that bags are free? ---If you're an electronics store, do you advertise free installation / delivery of a 70-inch tv? Or do you sell a tv too big for anyone to fit in their car and charge for delivery? --This is where you should ask about industry norms. ""Do the competitors offer free shipping? If so, how much are they charging?"""

Profit and Loss

"-E(P=R-C)M -ALWAYS review the revenue streams--even if your hypothesis suggests costs are the problem, you need to understand your revenue streams before you can intelligently analyze the situation and cut costs. What are the major rev/costs, and how have they changed over time? -Revenues --What are the major revenue streams, and what percentage of the total revenue does each stream represent? --Does anything seem unusual in the balance of percentages? -Costs --Any major shifts in costs? Do any costs seem out of line? --If we benchmarked our costs against our competitors' costs, what would we find? -Products --With new products, always be sure to ask what the advantages AND the disadvantages are. Everyone forgets about the disadvantages, but they can drive the case more than the advantages. Disadvantages might be things like product cannibalization, layoffs, or in the case of a new drug, side effects."

Starting a New Business

"-First step: investigate the mkt to determine whether entering makes good business sense --Who is our competition? --What mkt share does each competitor have? (would any use predatory pricing?) --How do competitors' products or services differ from ours? --Are there any barriers to entry or exit? -Second step: look at the company from a venture capitalist's POV: would you, an outsider, invest in this start-up? Would you risk your own money? Venture capitalists don't simply buy into an idea or product. They invest in: --Management ---How expd is the management team? ---What are its core competencies? ---Have they worked together before? ---Is there an advisory board? --Mkt and Strategic Plans ---What are the barriers to entering this mkt? ---Who are the major players and what are their respective mkt shares? ---What will the competitive response be? --Distribution Channels ---Which, and how many, distribution channels can we rely on? --Products and services ---What is the product, service or technology? ---What is the competitive edge? ---What are the disadvantages? ---Is the technology proprietary? --Customers ---Who are the customers? ---How can we best reach them? ---How can we ensure we retain them? --Finance ---How is the project being funded? ---What is the best allocation of funds? ---Can we support the debt under various economic conditions?"

Suppliers Questions

"-How many are there? -What is their product availability? -What's going on in their market? -How is the supply chain? Are the companies that supply you getting what they need from their suppliers?"

Product Scenarios

"-If a product is in its emerging growth state, concentrate on R&D, competition, and pricing -If a product is in its growth state, then emphasize marketing and competition -If a product is in its mature stage, focus on manufacturing, costs, and competition -If a product is in its declining state, define niche mkt, analyze the competition's play, or think exit strategy"

Competitive Response

"-If competitor introduces a new product or picks up mkt share, want to first ask questions such as: --What is the competitor's new product and how does it differ from what we offer? --What has the competitor done differently? What changed? --Have any other competitors picked up mkt share? --Have the consumer's needs changed? --Did they inx or expand into new channels? -Responses might include --Analyze our current product and redesign, repackage, or move upmarket --Introduce a new product --Inx our profile with a marketing and public relations campaign --Build customer loyalty --Cut prices --Lock up raw materials and talent --Acquire the competitor or another player in the same mkt --Merge with a competitor to create a strategic advantage and become powerful --Copy the competitor -When planning a product launch, or making a price change, you should take into account competitive response. Too many firms seem to have a wait-and-see attitude, which may erase much of the advantage they had hoped to gain with the new strategy"

Profit Scenarios

"-If profits are declining bc of a drop in revenues, concentrate on marketing and distribution issues -If profits are declining bc of rising expenses, though, then concentrate on operational and financial issues - e.g., COGS (cost of good sold), labor, rent, and marketing costs -If profits are declining, yet revenues have gone up, then review --Changes in costs --Any additional expenses --Changes in prices --The product mix Changes in customers' needs"

Sales Scenarios

"-If sales are flat and profits are taking a header, you need to examine both revenues and costs. Always start with the revenue side first. Until you identify and understand the revenue streams, you can't make educated decisions on the cost side. -If sales are flat but mkt share remains relatively constant, that could indicate industry sales are flat - and that your competitors are experiencing similar problems -If your case includes a decline-in-sales problem, analyze these three things: --Overall declining mkt demand (e.g., soda sales have dropped as bottled water becomes the beverage of choice) --The possibility that the current mktplace is mature or your product obsolete (e.g., vinyl records give way to CDs, which give way to digital) --Loss of mkt share bc of substitutions (e.g., video rentals have declined bc there are numerous substitutions vying for the leisure dollar, such as dining out, movie attendance, pay-per-view, Direct TV, and the internet) -If sales and mkt share are inxing but profits are declining, then you should investigate whether prices are dropping and/or costs are climbing. However, if costs aren't the issue, then you should investigate product mix and check to see whether the margins have changed"

Pricing Scenarios

"-If you lower prices and volume then rises, and your are then pushed beyond full capacity, your cost will shoot up as your employees work overtime; your profits, consequently, will suffer -Prices are stable only when three conditions are met --The growth rate for all competitors is approximately the same --The prices are paralleling costs --The prices of all competitors are roughly of equal value -The volume (amount you produce) and the costs are easier to change than the industry price levels, unless all parties change their prices together (e.g., airline tickets or gas prices) -The perfect strategy for the high-cost producer is one that convinces competitors that mkt shares cannot be shifted, except over long periods of time. Therefore, according to Henderson, the highest practical industry prices are to everyone's advantage - i.e., price wars are detrimental and everyone will profit more by keeping prices high."

Growth and increasing sales

"-Increasing sales can mean increasing volume, increasing revenues, or both. -Say you get an increasing revenue case, and the interviewer wants you to raise revenues by 10 percent. A good clarifying question would be ""by what rate have revenues grown for the last three years, and do you have any forecasts?"" -Step 1. Learn about the company and its size, resources, and products --Aka, refer to core questions --what funds does it have available to grow? -Step 2. Investigate the industry --Is it growing, and how is the client growing compared to the industry? Are the client's prices in line with its competitors? -Step 3. Inx volumes / revenues: --Expand the number of distribution channels --Inx product line thru diversification of products or services - particularly with products that won't cannibalize sales from existing products --Analyze the segments of the business with the highest future potential and margins --Invest in a marketing campaign --Acquire a competitor - particularly if the question is about indexing mkt share --Adjust prices. Take into account the price sensitivity of the customer. Lower prices to increase volume and raise them to dx demand or inx profits per unit --Create a seasonal balance ---Inx sales in every quarter - if you own a nursery, sell flowers in the spring, herbs in the summer, pumpkins in the fall, and xmas trees and garlands in winter -Another way to grow: Find niches in developing industries with high barriers to entry. There will be less competition and more notice if someone is trying to enter"

Developing a New Product Questions

"-Think about the product itself: What's special or proprietary about it? Is the product patented? For how long? --Are there similar products out there? Are there substitutions? --What are the advantages and disadvantages of this new product? --How does this new product fit in with the rest of our product line? --Can our sales force sell it? -Think about mkt strategy: --How does this strategy affect our existing product line? --Are we cannibalizing our own sales from an editing product? --Are we replacing an existing product? --How will this strategy expand our customer base and inx our sales? --What will the competitive response be? --If we are entering a new mkt, what are the barriers to entry? --Who are the major players and what are their respective mkt shares? -Think about customers: --Who are our customers and what is important to them? --How are they segmented? --How can we best reach them? --How can we ensure that we retain them? -Funding: --How is this product being funded? Does our company have the cash, or are we taking on debt? Can we support the debt under various economic conditions? --What is the best allocation of funds? -Consumer Adoption Rates: --How many units can we expect to sell? --Sometimes a case will involve a new product, particularly in a high-tech field. The interviewer may ask you ""what is the mkt size for this product and how many units can we expect to sell the first year?"" --First, keep in mind it is very rare for a new product, not matter how good, to capture more than 10 percent of its market in its first year - more likely 3-5 percent. This all depends on mkr, the strength of the competition, and how much better this new product is than its competitor --Second, take into consideration the Rogers Adoption/Innovation curve. Draw the curve, the turn your notes toward the interviewer and walk her through your thought process"

M&A

"-Two most important factors are whether it inxs shareholder value and whether the two cultures mesh well -If the buyer is a private equity firms, ask ""Why does the PE firm want to buy the company? What else does it own? And what does it plan to do with it (hold, flip, or break apart?"" Many students forget to ask this and they miss out on the countless synergies among portfolio companies. The synergies in PE holdings are a big thing a lot of students miss out on. -If the M&A involves one company acquiring another, ask not only ""why?"" but also, ""what other products do they sell?"" and ""What other synergies are involved?"" The acquisition needs make good business sense -Reasons to purchase: --Inx mkt access, boost the brand, and inx mkt share --Diversify the company's holdings --Pre-empt the competition from acquiring the company --Target company is a threat --Inherit management talent --Obtain patents or licenses or products --Gain from synergies, cost savings, cultural integration, expansion of distribution channels and customer base. Cross-sell products. --Gain tax advantages. --Inx shareholder value -Due diligence. Research the company and industry: --What kind of shape is the target company in? Management? Products? Profitability? Brand? What is the stand-alone value? What has been its growth rate? Why is it on the mkt? Consider all items in the core box about analyzing a company --How secure are its mkts, customers, and suppliers? --What are the margins like? Are they high volume, lower margin, or low-volume-high-margin? --How is the industry doing overall? And how is the company doing compared with the industry? Is it a leader in the field? --How will competitors respond? Are there any legal reasons we can't or shouldn't acquire the target company? --Are there technology risks? --How much will it cost? Will the client overpay? Does the buyer have enough cash or access to capital markets?"

Entering a New Mkt

"-why does this company want to enter this market? You want to analyze the company first, and then the market. This way you can see the market through the company's eyes--if you don't understand the client, you can't understand if the market is ""worth it"" -Step 1: start off with questions about the company (remember the core list) --What are the company's profits and revenues for the last three years? --What is the company's product mix? --IF this is about a new product ---Will it cannibalize an existing product? ---Is the customer segmentation(s) the same? ---Can we use the same distribution channels? ---Can we use the same salesforce? ---How and where will this new product be produced? ---Will we have to hire new workers or retrain current workers? ---How strong is the brand? ---What constitutes success? -Step 2: determine the state of the current and future market (remember the core list) --What is the size of the current market? --What is the growth rate? (ask for trends) --Where is the industry in its life cycle? (stage of development: emerging? Mature? declining?) ---Who are the customers and how are they segmented? ---What role does technology play in the industry and how quickly will it change? ---How will the competition respond? -Step 3: investigate the market to determine whether entry makes good business sense --Who are the competitors, and what size market share do they have? ---How do their products differ from ours? ---How will we price our products or services? ---Are substitutions available? ---Are there any barriers to entry? (lack of brand/street cred, capital requirements, access to raw materials, access to distribution channels, lack of human capital, and government policy. Also, industries dominated by a small number of big players can be a barrier. ---Are there barriers to an exit? How would we exit if this market sours? ---What are the risks? (changing market regulations of technology) -Step 4: if we decide to enter this market, we need to figure out the best way to become a player. There are four major ways to enter a market --Start from scratch and grow organically --Acquire an existing player from within the industry (grow inorganically) --Form a joint venture / strategic alliance with another player with a similar interest. What can each side bring to the venture? --Outsourcing. Have someone else manufacturer the product, with the client still handling marketing and distribution"

Replacement

"<a href=""https://www.youtube.com/watch?v=Sn97T1kqj0Q&t=10s"">https://www.youtube.com/watch?v=Sn97T1kqj0Q&t=10s</a>"

Issue Tree

"<div><ul><li>the visual breakdown of a question into its component parts vertically. Once you start breaking the question down further it continues in the same format to the right eventually leading to a single answer. </li><li>ex. If the question asked you to estimate how many fridges there were in India you could use an issue tree as follows:</li></ul><img src=""issue tree.png""> </div> "

2x2 Matrices

"<div>A two-by-two matrix is a simple and effective way of presenting information. It is very popular in consulting because it provides a big picture of options that are MECE. The matrix is generally divided into four segments, which indicate different strategic actions for each option within the respective segment. Single options are plotted into the matrix taking two key decision criteria into account. The chosen two dimensions are independent of each other. Hence, criteria need to be carefully selected.</div> <div>It is recommended to use matrices (if possible) in case interviews, as it will show the interviewer that you can break down complex ideas and communicate these in a structured manner. A matrix is an ideal tool to synthesize complex ideas into simple options.</div> <div>Question: In which business segments should we invest further?</div><div>Important data:</div>Importance for our business (fraction of the overall revenue)Expected performance (Growth)<div><img src=""2x2 matrix.png""></div>"

Using Core Compentencies to Devise Strategy

"<div>Core competencies are an opposite approach to <a href=""https://www.preplounge.com/de/bootcamp.php/case-cracking-toolbox/structure-your-thoughts/porters-five-forces"">Porterâ€™s five forces</a>, which focus on the external environment as a key factor, which drives decisions. The Core Competency concept uses companiesâ€™ internal <a href=""http://www.preplounge.com/en/bootcamp.php/case-cracking-toolbox/structure-your-thoughts/4c-framework"">capabilities</a> as drivers for strategic choices.</div><div>Knowing the core competencies of a company in a <a href=""https://www.preplounge.com/de/bootcamp.php/interview-first-aid/crack-the-case-interview/case-studies"">case interview</a> will help you to understand:</div><ul><li>Where to focus in terms of introducing and developing new products, one dimension of the <a href=""https://www.preplounge.com/de/bootcamp.php/case-cracking-toolbox/structure-your-thoughts/2x2-matrices-and-the-bcg-matrix"">Ansoff Matrix</a>.</li><li>What processes to outsource.</li><li>How to build a competitive edge in terms of cost or quality.</li><li>How to create <a href=""https://www.preplounge.com/de/bootcamp.php/case-cracking-toolbox/identify-your-case-type/market-entry"">new markets</a> or enter emerging high growth markets.</li></ul>ex. <div>Apple's core competencies:</div><ul><li>Design: Life-style design</li><li>Technology: Product differentiation through innovation</li><li>Marketing:<ul><li>Viral marketing</li><li>Superior brand with matching <a href=""https://www.preplounge.com/de/bootcamp.php/case-cracking-toolbox/structure-your-thoughts/4p-framework"">price and placement</a></li></ul></li><li>Secrecy about new products </li></ul><div>Apple's focus on areas where it can deliver the best value has resulted in a set of very loyal customers and it is unlikely to convince Apple customers to switch to a competitor's product. </div><div>Hence, it is crucial for a company to have a core competency and leverage this strength to be successful.</div>"

The right Price

"<div>Generally, 3 different approaches are used to set the <a href=""https://www.preplounge.com/en/bootcamp.php/case-cracking-toolbox/identify-your-case-type/pricing"">price</a> of a product:</div><ul><li>Cost-Based Pricing</li><li>Competitive Analysis</li><li>Value-Based Pricing</li></ul><div>The â€œrightâ€ price is the one, which maximizes the revenue. To sell the greatest amount at the best price possible, we need to know how people value the product; therefore value-based pricing is usually recommended.</div>"

The right Product

"<div>The product must meet the needs of customers. This category also includes packaging, as well as services and guarantees, which could come with the purchase. The key area in this framework is to understand the distinctive characteristics of the product in comparison to the competitors' products (see benchmarking).</div>"

The Pyramid Principle

"<div>Try to have 3 explanations for your recommendation supported by data. First, state the recommendation. Second, provide 3 reasons. Third, provide information on how to implement the recommendation. </div><img src=""10 Pyramid Principle.png""> "

Tabular Segmentation

"<div>Using a table to construct your answer is a good method to choose if you are likely to be breaking a data set down. The breaking down of a population into age groups as shown in the segmentation section leaves you with five different groups. In this case it is beneficial to use a table in order to treat each group differently. For example, if the question asked you to estimate how many people go swimming each week in the UK we may estimate the answer using the following table:</div><div><img src=""market sizing table.png""></div><div>Each row of the table is a different subgroup whilst each column is a different logical step. Some of the steps use the same figures for each group such as hours in a day and this makes the maths more time consuming. An alternative would be to move into an issue tree at this point meaning you only have to multiply by 24 once.</div>"

Ansoff Matrix

"The Ansoff matrix is one of the most known two-by-two matrices. The underlying question of this graph is how a company could achieve future growth in terms of revenue. Here, four different strategic options are available: market penetration, market development, product development, or diversification. <img src=""Bildschirmfoto 2014-03-26 um 00.54.51.png""> "

Total Adressable Market

"also called total available market, is a term that is typically used to reference the revenue opportunity available for a product or service. TAM helps prioritize business opportunities by serving as a quick metric of a given opportunity's underlying potential. ex. The client provides you with the above data and remarks that its SUVs have been incredibly unpopular with the age 56 - 65 crowd because SUV interiors have been deliberately styled with a younger customer in mind. Based only off the data provided in this chart, do you agree with her assessment?<div></div><img src=""types_distribution.png""> <div>No, it's impossible to tell unless we know the overall age distribution of the addressable market.</div><div>In this, case you really need to understand the distribution of the population in the addressable market to answer that question. For example, if the addressable market was 30% 25 - 34 aged and only 10% 56 - 65 aged, the SUV would actually be over-indexing in sales to the older age group!</div><div>Finally, the last answer is incorrect because there is no data to back it up! Even if it were true and a consultant felt he/she knew that anecdotally, they'd have to find a quantifiable way to present the finding so it was credible for the client.</div>"

Capabilities

"<ul><li><a href=""https://www.preplounge.com/en/bootcamp.php/business-concept-library/useful-business-analysis-tools/core-competencies"">Core competencies</a></li><li>Human Resources</li><li>Technology</li><li>Value for the customers</li><li>Financial resources</li></ul>"

Market Sizing Rules

"<ul><li><div>1. Always use a tree to structure your problem.</div><div>2. Find the trade-off between pragmatism and accuracy.</div><div>3. Do sanity checks along the way.</div></li><li>if you can use replacement instead of a long complex number problem, that's easier and could prevent mistakes</li></ul>"

Chart types: Comparisons

"<ul><li><div>The primary goal of a comparison chart is to show how a single metric (eg, revenue, cost, miles per gallon, NPS, batting averages, etc) compares across items.</div></li><li><div>The prototypical comparison charts are a column chart (shown below) and a bar chart, which is simply a column chart but the columns are rotated ninety degress to the right.</div></li><li><img src=""types_comparison.png""> </li></ul>"

Chart types: Compositions

"<ul><li><div>The primary goal of a composition chart is to show how a single metric (eg, cost, revenues, addressable market) breaks down into smaller sub-components.</div><div> </div></li><li>The prototypical composition chart is a stacked column chart or stacked area chart, both of which can clearly illustrate the quantitative breakdown of a single metric.<img src=""types_composition.png""></li></ul>"

Chart types: Distributions

"<ul><li><div>The primary objective of a distribution chart is to show the probability distribution of a continuous variable (eg, the age of a customer base, customer satisfaction on a scale of 1-10).</div></li><li><div>The prototypical chart for displaying distribution is a histogram and variants of it.<img src=""types_distribution.png""></div></li></ul>"

Chart types: Relationships

"<ul><li><div>The primary objective of a relationship chart is to show how one variable relates to another variable. For example, does the likelihood of rain (as measured by percentage) relate to the number of umbrellas carried by pedestrians?</div></li><li>The prototypical relationship chart is a scatter plot, which plots data points on two axes. More complicated relationship charts are bubble charts, which add in a third z-axis that can communicate additional information.<img src=""types_relationship.png""></li></ul>"

Possible Recommendations Competitive Response

"<ul><li>Make the current product more attractive:</li><ul><li>Redesign, repackage the current product.</li><li>Change the market segment of the current product (move upmarket or downmarket).</li><li>Increase the marketing activity (i.e., increase perceived attractiveness).</li><li>Build customer loyalty or increase switching costs (e.g., by adding a loyalty scheme).</li><li>Make another dimension of the product more attractive (e.g., cut <a href=""https://www.preplounge.com/en/bootcamp.php/case-cracking-toolbox/identify-your-case-type/pricing"">prices</a>).</li></ul><li>Introduce a different product:</li><ul><li><a href=""http://www.preplounge.com/en/bootcamp.php/case-cracking-toolbox/identify-your-case-type/mergers-and-acquisitions"">Acquire</a> the competitor or capabilities for the new product.</li><li>Copy the competitor with the client's available resources.</li></ul><li>Do nothing:</li><ul><li>Doing nothing can indeed be a recommendation.</li><li>Doing nothing can be a strategy if you want to wait for more information so that you are in a better position to make a decision.</li></ul></ul>"

Market Development

"<ul><li>A Company is trying to grow in a <a href=""https://www.preplounge.com/en/bootcamp.php/case-cracking-toolbox/identify-your-case-type/market-entry"">new market</a> with existing products.</li><li>New markets could be on a regional, national or international level.</li><li>Risk and growth potential are considered to be higher than the ones of a market penetration strategy.</li></ul>"

Comparison Chart Questions

"<ul><li>Is any item significantly over or under indexing against its peers? If so, it indicates an area that is worth digging into so you can understand why a certain item over or under performs the selected peer set.</li><li>Does every item stack up similarly? Similarity in itself is an interesting insight, for it illustrates that these items don't vary much on the metric shown.</li><li>Is this the right metric to use for the comparison? Does this metric open up the comparison for biases? If so, what metric might be a better substitute?</li></ul>"

Distribution Chart Questions

"<ul><li>Is it a normal, bell-curve distribution? Given the type of data you're looking at, would you expect a normal distribution or something different?</li><li>Is the distribution skewed significantly in one direction or the other? If so, what would drive such a dramatic shift?</li></ul>"

Relationship Charts Questions

"<ul><li>Is there a clear diagonal line (from either corner)? If so, this will indicate a close to 1-to-1 relationship where as the x-axis increments by 1, the y-axis will too (or vice versa for decrementing).</li><li>Does the scatter plot look like a jumbled mess? If so, maybe these variables don't relate to each other at all. In which case, an increment or decrement in the x-variable has no bearing on the y-variable.</li><li>Is there a vertical or horizontal line pattern? This could indicate that no matter what, one variable will remain fairly constant.</li></ul>"

Costs

"<ul><li>Relative cost position, cost advantage compared to the competition</li><li>Profitability by customers, product lines, geography</li><li><a href=""https://www.preplounge.com/en/bootcamp.php/business-concept-library/common-terms-of-business/economies-of-scale-and-scope"">Economies of scale</a></li><li>Introduction of best practices</li><li>Exiting unprofitable areas</li><li>Reorganization of business units</li></ul>"

Ivy Case System Step 3

"Ask clarifying questions. If tasked to raise revenues by 10%, a clarifying question might be ""what have revenues done for the last three years?"" If the interviewer throws out industry jargon, slang, or a string of initials and acronyms and you don't know what they are--ASK. You don't lose points for asking questions whose answers you shouldn't necessarily know."

Turnarounds

"If you get a case in which the company is in trouble and you've been brought in to save it and turn it around, you want to: -Analyze the company and industry --Why is it failing? Bad products or services? Bad management? Bad economy? Bad prices? --Are our competitors facing the same problem? --Do we have access to capital? --Is the company publicly traded or privately held? -Possible actions: --Learn as much as possible about the company and its operations --Analyze services, products, and finances --Secure sufficient financing so your plan has a chance --Review the talent and temperament of all employees, and get rid of the ""deadwood"" --Determine short-term and long-term goals --Devise a business plan --Visit clients, suppliers, and distributors - and reassure them --Prioritize goals and get some small successes under your belt ASAP to build confidence"

If you tell your client NOT to enter a mkt

"If your answer is no, the client should not enter the market, you can stand out from the other candidates by coming up with an alternative idea to help the company reach its goal. ""And we can help you with that."""

Ivy Case System Step 4

"Label the case and lay out your structure. By far the toughest part of the process. About 30-90 seconds of silence here may save wasted time later in the interview. Because you've studied scenarios, you can quickly go through the bullet points in your min and decide which are the most relevant to this particular question. You then need to tell the interviewer how you intend to proceed. Remember that you are not married to your structure. Bc new info is added, your structure might become obsolete. Make sure your structure is MECE. Once you've drawn your structure, turn your notes toward the interviewer and walk him through your thought process. This bring him into the interview and makes him feel less like an interviewer and more like a client. Start with a top-down view: top layer, than your reasons for each branch."

Ivy Case System Step 5

"State your hypothesis. ONLY consulting firms care about having a hypothesis. They want you to state a hypothesis within the first few minutes of the case, usually after you walk them through your structure. It's useful for problem solving so that you have something to either prove or disprove. Ex. if you get a profit and loss case, you might say ""I hypothesize that profits have fallen because costs have risen."" If you disprove it, you'll want to update your hypothesis as you proceed through the case. Interviews are super competitive, so you want every advantage: STATE A HYPOTHESIS"

The BCG Matrix

"The most known two-by-two matrix is the BCG matrix<div>The BCG matrix, also called the growth-share matrix, helps assess a companyâ€™s current product portfolio based on the product life cycle and the experience curve. Since both criteria are hard to quantify, proxies are used to illustrate them. The product life cycle is reflected by market growth and the relative market share mirrors a companyâ€™s experience curve. Based on these two criteria, investment or divestment decisions can be taken for single products once they are plotted into the matrix.</div><div><img src=""BCG_1.png""></div>"

The Future Questions

-Are players entering or leaving the mkt? -Are any mergers or acquisitions going on? -Are there any barriers to entry or exit? -Substitutions, what alternatives are there?

21 Ways to Cut / Lower Costs: Labor

-Cross-train workers -Cut overtime -Reduce employer 401(k) or 403(b) match -Raise employee contribution to healthcare premiums -Institute four 10-hour days instead of five 8-hour days --Could theoretically backfire, though: in California and a few other locations, an employee receives overtime pay after working more than eight hours in a single day. So, a California non-exempt employee on a four-day workweek would receive 32 hours of straight pay and eight hours of overtime every week -Convert workers into owners --If they have a stake in the company they will work longer and harder and constantly think of ways to cut costs in ways they may not have done before -Contemplate layoffs -Institute across-the-board pay dxs --Obviously, if you only cut pay for lower-tier employees, they will be furious and work quality will suffer

21 Ways to Cut / Lower Costs: Finance

-Have customers pay sooner -Refinance your debt -Sell nonessential assets -Hedge currency rates -Redesign health insurance

21 Ways to Cut / Lower Costs: Production

-Invest in technology -Consolidate production space to gain scale and create accountability -Create flexible production lines -Reduce inventories (JIT) -Outsource -Renegotiate with suppliers -Consolidate suppliers -Import parts

Market Core Questions

-Market size, growth rate, and trends? Ask for three years of data. How is the industry doing overall and how is the company growing compared with the industry? -Where is it in its lifecycle? (Emerging? Mature? Declining?) -Industry drivers? (Brand, street cred, price, content, size, economics, technology, geopolitical events, bargaining powers of buyers, bargaining power of suppliers, or distribution channels?) -Customer segmentation(s)? Which segments are the company going after? How big are they? How profitable are they? -Margins? -Industry changes --M&A? New players? --Changes in technology? --New regulations? -Distribution channels? -Major players and market share? -Product differentiation? How do they differentiate their products or services from competitors, or vice versa -Barriers to exit/entry?

The Four Key Scenarios

-Profit and Loss -Entering a New Mkt (AND M&A) -Pricing -Growth and Inxing Sales

Company Core Questions

-Profits and revenues for the last three years? Is it publicly traded? -Customer segmentations? --Characteristics? --Changing needs? --Profitability by segment? -Product mix? Have there been any recent changes in product mix? --Costs / margins? --Product differentiation? --Market share? --Revenue mix and trends? -Production capabilities / capacity? Are they able to expand? Are they running at full capacity now, and if not, why not? -Brand? How strong is the brand? Is it a market leader or has the brand faded? (often the companies in cases are made up, so we have no idea) -Distribution channels? How are the products/services currently distributed? How can the company expand its channels?

Pricing

-Step 1: Investigate the company. How big is it? What products does it have, and is it a mkt leader? --More important: What is the pricing objective: profits, mkt share, or brand positioning? ---Ex. tablets ----iPad - very expensive. Apple wanted to sell a luxury good so they could have high profits ----Samsung Galaxy - moderate price. They wanted mkt share ----Kindle Fire - sold at cost. Much like gaming consoles, the complementary goods (books, movies, songs, prime membership) would make far more than the product itself would. Further, once someone purchases a product likethis, they are inevitably gonna buy stuff to do with it (especially since the Kindle Fire had no internet access) --Is it in charge of its own pricing strategies, or is it reacting to suppliers, the market, and competitors? -Step 2: investigate the product. --How does it compare with the competition? --Are there substitutes or alternatives? --Where is the product in its growth cycle? --Is there a supply-and-demand issue at work? -Step 3: determine a pricing strategy. There are three main pricing strategies to think about

Industry Analysis Questions

-Where is it in its life cycle? (emerging? Mature? Declining?) -How has the industry been performing (growing or declining) over the last one, two, five, and ten years? How have we been doing compared with the industry? -Who are the major players and what mkt share does each have? Who has the rest? -Has the industry seen any major changes lately? --New players, new technology, inxd / new regulation, etc -What drives the industry? --Brand / street cred, price, quality, endorsements, fads, marketing, products, size, economics, or technology? -Profitability. What are the margins?

Ivy Case System Steps

1. Summarize the Question 2. Verify the objectives and ask if there are any other goals 3. Ask clarifying questions 4. label the case and lay out your structure 5. State a hypothesis

The right Place

<div>Place refers to the PLACEment of a product in the market rather than just the point of sale. This dimension includes the whole distribution system: transportation, storage, and choice of a distribution channel to the point of sale among others. To choose the right place you need to focus on the customersâ€™ needs, wants, and behavior.</div>

The most effective Promotion

<div>Promotion bundles all communication activities with the customers. Ideally, the information of a product is presented in such a manner that it raises awareness of the target group and convinces them to purchase the product. Promotional costs often represent a sizable proportion of the overall costs.</div>

Industry Multiple Method of Valuation

<div>The DCF method is limited since it does not take into account additional dimensions other than money (unless you quantify those dimensions into the future cash flows).</div><div>Football teams, for instance, are often overvalued compared to their generated returns. For such cases, there is another method called the industry multiple method.</div><div>This method allows you to valuate a firm by using a metric known to this company and multiplying it by the associated industry multiple. This can be done for similar players in the industry to assess their relative valuations using benchmarking.</div><div>An example of a multiple ratio is the price-to-book ratio (P/B). This multiple is the ratio of the actual firm valuation (based for example on M&A deals) and the book value of the same firm (value of its assets which can be found in the balance sheet). If a firmâ€™s assets added up to 200 million and it was sold for 100 million, the ratio is 0.5 (100 million/200 million). Do this for a set of representative industry players, take the average and you get the average industry multiple. Finally, you multiply the industry multiple with the value of the assets.</div><div>Other commonly used ratios are the price-earnings ratio (P/E ratio or PER) and the EBITDA ratio.</div><div>Since you will not be required to calculate the value of an investment on too high a level of detail, it is not necessary to learn values for different interest rates or industry multiples by heart. However, to give you an idea about orders of magnitude:</div>A good guess for an industry multiple is EBITDA*10.Good guesses for interest rates would range from 3% (inflation) to up to 20% for highly speculative investments.

Discounted Cash Flow Method of Valuation

<div>The first valuation method is the Discounted Cash Flow method. This method shows how much money you would have in your savings account at a certain interest rate in order to provide you with the same annual cash flow generated by the company that is being evaluated. Here, you simply divide projected annual cash flows by a discounted rate (or interest rate). Of course, the discount rate of your savings account will be much lower than that of an investment in a company. This is so because the risk you take putting your money in a savings account is much lower than the risk of investing in a company. </div>This is, straight up, the NPV method

Issue Tree Steps

<ol><li>Draw out your tree with only the branch labels</li><li>Turn the page round to the interviewer and confirm that your logic is reasonable</li><li>Fill in the data that you do know</li><li>Ask the interviewer if they are able to fill in any of the blanks (they may refuse to fill in any)</li><li>Fill in the remaining blanks with sensible estimations of your own and justify them to the interviewer</li><li>Do the required maths</li><li>Sense-check your answer (if it seems unreasonable then go back to step 5)</li><li>State your answer to the interviewer</li></ol>

Diversification

<ul><li>A Company is trying to grow in a new market with a new product.</li><li>3 diversification strategies can be distinguished: horizontal, concentric, and lateral.</li><li>Horizontal diversification: products are often unrelated to current products, but have the potential to attract current customers.</li><li>Concentric diversification: products often display synergies with current products and have the potential to attract new customers.</li><li>Lateral diversification: new products have no relation or synergies with current products.</li><li>Risk and growth potential are the highest of all strategies.</li></ul>

Product Development

<ul><li>A Company is trying to grow within an existing market but with new products.</li><li>New products do not need to be necessarily new, but can also be adaptions or updates to existing products developed using companies core competencies.</li><li>Risk and growth potential are comparable to these of a market development strategy.</li></ul>

Market Penetration

<ul><li>A Company is trying to grow within an existing market with existing products.</li><li>Can be achieved by attracting new customers (first buyers), which bought previously from competitors (stealing market share).</li><li>Low risk and growth potential.</li></ul>

Competition

<ul><li>Competitive position portrayed through the share and relative share of the market</li><li>Growth of the last years and expected growth</li><li>Fragmentation</li><li>Performance, for example profitability, relatively to ours</li><li>Dynamics of new entrants</li><li>Other trends</li></ul>

The Four Cs

<ul><li>Customer</li><li>Competition</li><li>Cost</li><li>Capabilites</li></ul>

Customer

<ul><li>Market size in terms of revenue</li><li>Growth</li><li>Segmentation by geography, products and/or other segments</li><li>Customer segmentation and types of customers</li><li>Attractiveness in terms of revenue and expected growth</li><li>Special needs and wishes</li><li>Loyalty</li><li>Distribution channels</li></ul>

The MECE Principle

<ul><li>Mutuall Exclusive Collectively Exhaustive</li><li>can be applied to demographics such as populations, used to formulate problem statements and to process data sets. In simple terms breaking down a data group in a MECE way means creating sub groups that do not overlap, and their sum equals the original number i.e no data has gone missing. An example useful to know for market sizing questions is how to segment a countryâ€™s population into age groups (as age groups often behave differently)</li></ul>

Compisition Chart Questions

<ul><li>What are the largest sub-components? And the smallest? And what is the driving force for why a sub-component is the largest or smallest?</li><li>Does the composition change significantly over time or other variables? If composition changes over time, or varies against multiple items displayed, what is driving that variance?</li><li>What is the importance of fragmented (many components each contribute a tiny bit) vs. consolidated (a few components make up most of the metric) in the scenario at hand? For example, a fragmented composition in a marketplace might indicate opportunity for entrance.</li></ul>

Core Competency

A core competency is a skill or a capability of a company that delivers the highest value for the customer compared to its other activities. The concept is related to Porterâ€™s value chain, as core competencies are a sub-category of the primary activities, depicting the most crucial processes. In addition, a process is considered a core competency if the activity delivers higher value compared to processes of the same category from its competitors. <div>A core competency usually features the following three characteristics: <ul><li>Challenging to be replicated by competitors because it is a result of an extensive learning period.</li><li>Delivers unique value to the customers.</li><li>Can be applied to the majority of products and markets of the company.</li></ul></div>

Driver of productivity declines

People driven -Is the quality of workers declining? -Has new management sapped morale? -Are workers adequately trained? Materials driven -Did management implement harmful new processes? -Are the increased safety measures slowing down production? -Did factory floor layout change? -Was automation introduced? -Any other new processes? Process driven -Using different raw materials? Are they more difficult to use? -Is packaging of raw materials different (more time consuming to use) -Did materials suppliers change?

Segmentation

Segmenting data is a common theme throughout multiple types of consulting questions, and it is no different with market sizing questions. Segmenting is the concept of breaking down large data groups without losing any data in the process. The principle you need to understand in order to do this correctly is the MECE principle.

Raising Capital

Some of the top ways to raise capital are through angel investors, venture capitalists, government grants, and small business loans. There are other methods for financing such as credit cards or invoice financing, but these should be used only if you need cash quickly and know the risks involved.

Ivy Case System Step 1

Summarize the Question; Streamline it

4P Framework

Used for finding the right marketing mix within a case study <ul><li>The right Product</li><li>The right Price</li><li>The right Place</li><li>The right Promotion</li></ul> Example: Starbucks Product: a variety of caffeinated drinks and a distinct ambiance unavailable before Starbucks in the US. Price: premium price because of the uniqueness in the American market and willingness of people to pay. Place: establishing themselves as a coffee-to-go place, therefore they set up coffee shops in places with a high frequency of walk-in customers. Promotion: Starbucks is one of the most recognized brands today. Starbucks addresses its modern clientele using various kinds of advertisements such as mobile apps, social networks, and other types of viral marketing.

Ivy Case System Step 2

Verify the objective(s). Ask if there are any other goals or objectives. Figure out what constitutes success in the clients mind

The 5 Cs

client, company, cost, channels, competition

Tabular Segmentation Steps

helpful to use lined paper if it is available when using a table to answer market sizing questions as it keeps the rows clear and legible <ol><li>Draw out your table with only your row and column labels</li><li>Turn the page round to the interviewer and confirm that your logic is reasonable</li><li>Fill in the data that you do know</li><li>Ask the interviewer if they are able to fill in any of the blanks (they may refuse to fill in any)</li><li>Fill in the remaining blanks with sensible estimations of your own and justify them to the interviewer</li><li>Do the required maths</li><li>Sense-check your answer (if it seems unreasonable then go back to step 5)</li><li>State your answer to the interviewer</li></ol>

Consulting Frameworks

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