Case Interview Frameworks - Consig - SJMSOM IIT Bombay PDF

Presents
Cracking Case Interview: Methodology and

Frameworks
11-08-2016
Recap
What is Consulting?
What are the different types of Consulting?
Questions asked in interview
Things to keep in mind
Frameworks
ConSIG | SJMSOM | Case Interview Frameworks

Consulting
What is Consulting?
Consulting is the business of giving
expert/professional advice to other professionals
3
Consulting Interview
Questions Asked in Interviews
Guesstimates Business Brain Teasers

Cases
Market Size Market Entry Puzzles
Revenue Forecast Profit & Loss
M&A
Pricing Strategy
4
Make a note
Things to Keep in Mind
Take
Notes
No Vague
Ask
Assumpti
Questions
ons
Problem
Solving
Think Out Layout a

Loud Roadmap
Take Your
Time
5
Frameworks
Structured thinking and synthesis of all possible facets of problem
6
Agenda
Case Interviews
Commonly used frameworks
How to apply particular framework to solve business
problem?
How to combine and customize various framework?

Purpose of Case Interview
Whats a case interview?
Analysis of business questions
Most of the times no specific answers are expected.

Your thought process will be judged (analytical skills)
You need to show your analytical, logical and creative way of
thinking to deal with the issue
Adopt a Holistic and systematic approach
Always begin with general issues and hypotheses which will
lead to more specific sub-issues and outputs
Evaluation based on communication skills

Case Interviews - Process
Ask Key Questions

To Validate Or
Invalidate Each
Hypothesis
Clarify major issues by

For Each Issue
Listen to the case as restating the problem Reformulate
Develop One Or
presented and clarifying Hypothesis
More Hypotheses
questions - or -
Next Hypothesis
Summarize Your
Conclusions

Case Interviews - Process
Business Situation/Client
Objective
Issue Issue Issue
Hypothesis Hypothesis Hypothesis

Begin with the big general
picture and narrow down to
reach to final solution
Analysis Analysis Analysis
Synthesis

Case Interviews
Illustration of breaking up the problem at hand into smaller sub-parts and proceeding in
systematic approach
Fact
Fact Finding
Conclusion Recommendation
Hypothesis Fact
Issue Finding
Hypothesis Fact
Conclusion Recommendation
Fact Finding
Fact
Listen Develop Collect Synthesize Diagnose Prescribe

Tips for acing Case Interviews
Take notes
Dejargonize (Express the problem in own words)
Think out loud
Use schemes and graphics to express the approach
Address issues one at a time
Request additional information if required (explaining why)
Perform important analysis (remember to speak out your
thought process throughout)
Dont hesitate from taking a step back if headed in the
wrong direction
Watch cues from interviewer maintain eye contact and
have a positive body language
Stay calm and confident!

Types of Cases
Industry Analysis
Increasing profits (Increasing Sales and/or Reducing
costs)
Market Entry
Market Sizing and expansion
New Product Development
Pricing Strategies
Capacity Expansion
Increasing Sales
Reducing costs
Merger and acquisition cases

Frameworks
Frameworks for Case Interviews

Frameworks for Case questions
Revenue Cost breakdown (Profitability Framework)
Three Cs & P
The Four Ps
Five Forces analysis
SWOT analysis
Value Chain
Supply and Demand

Frameworks..
3Cs and P (Best for cases like new business, new product, new
market entry, growth strategy, and company assessment)
Customers
o How are customers segmented?
o What are your target customers?
o What are the customers needs and wants?
Company
o What are your companys capabilities and expertise?
o What is the companys brand and culture?
o How is its financial situation?
Competition
o What is the market share and growth potential of each competitor?
o How have the competitors performed?
Product
o What is the nature of your products or services?
o Do they meet the needs and wants of the customers?
o What are the complementary goods and the substitutes?

Frameworks..
The Four Ps (Best for marketing cases)
Product:
o What do your customers need and want from your product or service?
o What features does it have to meet these needs and wants?
o How is it differentiated versus the competitors?
Place:
o Where do the customers look for your product or service?
o How can you access the right distribution channels?
o How do your competitors distribute their products?
Promotion:
o Where and when you can get across your marketing messages to your
target market?
o How do your competitors do their promotions?
Price:
o What is the value of the product or service to the customers?
o Are there established price points in this area?
o Are the customers price-sensitive?
o How is your price compared to your competitors?

Frameworks..
Porters Five Forces (Best for cases of new market entry,
business strategy development, industry analysis)
Threat of New Entrants: Threat of Substitute Products or Bargaining Power of Suppliers:
Is it easy or difficult to enter the market? Services: How easy is it for the suppliers to
What are time and cost of entry? Do your customers find substitutes drive up prices?
What are the barriers to enter the easily? How many suppliers are there?
market? How about the substitutes What is the size of each supplier?
Does your company have any advantages performance? How about the differentiation of
(cost advantage, economics of scale, etc.)? What is the perceived level of product inputs?
Does it have protection for its key differentiation? Does your company have ability to
technologies? What is the cost of change? substitute the suppliers?
Rivalry Competition: Bargaining Power of Buyers:

How intense is the How easy is it for the buyers to
competition in your market? drive prices down?
How have the competitors How many customers are there?
performed? What is the size of each purchase?
Does your company have any How is the customers price
competitive advantages? sensitivity?
Do they have ability to substitute?

Frameworks..
SWOT (Best for cases of new business, new product, new
trends and changes, strategic planning)
Strengths:
What are the characteristics that give your organization an advantage over others?
Weaknesses:
What are the characteristics that place your organization at a disadvantage relative to others?
Opportunities:
What are the opportunities or favourable trends in the market?
Threats:
What are the elements in the environment that could cause trouble for the business or
project?
Supply and Demand (Best for cases of market research, market entry,
price setting)
Supply:
o What is the quantity of a product or service desired by buyers?
o Is supply increasing, decreasing, or unchanged?
o How do you segment suppliers?
Demand:
o What is the quantity of a product or service that people are willing to buy?
o Is demand increasing, decreasing, or unchanged?
o How do you segment buyers?

Frameworks..
Value Chain (Best for cases of product analysis, cost
analysis, competitive advantage, management strategy)
Inbound Logistics:
o These are all the processes related to receiving, storing, and distributing inputs
internally
Operations:
o These are the transformation activities that change inputs into finished products
and services
Outbound Logistics:
o These activities deliver your finished product or service to your customer
Marketing & Sales:
o These are the processes you use to persuade clients to purchase from you instead
of your competitors
Service:
o These are the activities related to maintaining the value of your product or service
to your customers, once it has been purchased
Note: The above framework is just a typical value chain for general cases. For
each actual case, the value chain can vary a lot depending on each specific
industry. For example, value chain of the cement industry would be: Limestone
Clinker Cement Concrete Construction.

Frameworks..
BCG Matrix

Frameworks..
GE Matrix

Thank You
Presents
A preparatory session on
Profitability Frameworks (Case Based Approach)

11-08-2016
Profitability Framework
What are we going to cover
Profitability
Growth Revenue
Cost Cutting
Company turnaround

Profits are declining.

How to turn around the organization
A Hypothetical Case:
Our client is a major retailer in clothing and household products.
Our client has been experiencing sluggish growth and declining
profits. Our client has 15 stores in malls in metros and suburbs.
What do you do?

Clarifications to ask in the beginning
Is it industry wide problem?

Which segment do you cater to?
How large is that segment?
Benchmarking against competitor?
External factors affecting the product?

Profitability
REVENUE COST

Cost Analysis
Fixed Cost
Variable Cost

Cost Analysis
TOTAL COST = FC + (VC * Number of units)
COSTS
NO OF UNITS
COST PER UNIT (SALES PROD
MISMATCH)

Concept of Value Chain

Identify fixed and
variable cost

Revenue Model
Revenue
Revenue per Number of

customer Customers
Industry Company
Basket size Pricing
wide specific
Growth Market size Profitability Internal External

Profitability Framework - Revenue Model
Company
Revenue
External Internal
revenue revenue
External
Competition Supply Demand
conditions
Value chain 4Ps
Product Price Promotion Placement
Competitive
POP POD ABC model
pricing

Your client is a drug lord from Mexico

whose company is reporting a drop in
profits in the last 2 years. He has hired
you and you have no choice but to figure
out why. How do you work it out?

Thank You
Presents
A preparatory session on
Market Entry Frameworks (Case Based Approach)

11-08-2016
Market Entry Framework
MECE
Mutually Exclusive, Collectively Exhaustive - Diving
problem in distinct, non-overlapping issues

MECE

Your client is an electronics

manufacturer which wants to enter
the Haryana market. You need to
tell them whether it is a good idea
to do so.

Desirability Analysis Is Indian market attractive or desirable?
Feasibility Analysis Is Client capable of doing business there?

Desirability Analysis Is the market attractive or desirable?
Porters 5 Forces

Desirability Analysis Is the market attractive or desirable?
PESTEL Analysis

Desirability Analysis Is Indian market attractive or desirable?

Based on Porters and PESTEL Analysis,

list down KSF required by the company
New product variants

Service centre network
Skilled manpower
Higher margin (distribution)
Step 1: For every component of value chain, ask a question

whether this component is important for given KSF
Step 2: If a given component is important for KSF then what
should be its value to meet KSF
Step 3: Whether this component is able to meet desired value

Desirability Strength Weakness

Analysis
SWOT
Feasibility
Analysis Opportunity Threat

Can it make profit?
Profit
Revenue Cost

KNOW MORE ABOUT PROBLEM SOLVING TOOLS
Books:
The Mckinsey Mind
The Mckinsey Way
Case Interview Secrets: A Former McKinsey
Interviewer Reveals How to Get Multiple Job
Offers in Consulting
Internet: www.caseinterviewscracked.com

Avoiding some common mistakes
When setting up your framework view the case from the
perspective of a manager scoping out the modules for the
consultants on her team
What buckets of information do you need - Your framework comes from
this
Which are most critical - Tells you where to start
What information can I fill in from my past experience - Leads you to smart
questions
Dont ask the interviewer where they want to start the case. Pick a
place and give a brief explanation why you are starting there
Dont rapid fire questions. Lead each question with a transition from
the data you just got or a rationale for why you are asking the
question
Before making a calculation walk the interviewer through the steps
you are going to take (Revenue = Market Share * Total Market Size).
Then take a minute to do the calculations on your paper and gut
check your answers
Use the results of your calculations to make a conclusion and
transition to your next question
Keep calm and Cool!!!

THANK YOU
APPENDIX

Case types..
Industry Analysis
Easily recognized by cases that ask whether firms should be in industry, or by cases
that lead to entire industry doing poorly
Key Points Candidate Should Explore Examples
Evaluate market size and segmentation A group of investors is
Market Analyze product demand/trends considering building a 40,000-
Identify customer requirements seat concert pavilion in the
Northwest suburbs. What factors
Analyze competitive economics should they consider?
Determine levels of
Competition o Product differentiation A manufacturer of automotive
o Market integration batteries is losing market share
o Industry concentration
and profitability is eroding. What
should the company do?
Evaluate negotiation power
Customer/Supplier A national provider of in-home
Identify substitutes
Relations Assess backward or forward integration potential
health care services is
considering purchasing a regional
managed-care facility with 250
Evaluate companies entering/exiting
physicians. What factors should
Determine competitor reaction to new entrant our client consider in making this
Barriers to Entry /
Analyze economies of scale decision?
Exit Predict learning curve
Research government regulations A leading manufacturer of
automobiles is considering
Identify key financial ratios (ROI, ROE) acquiring a national rental car
Financials Determine fixed and variable costs company. What factors are
Assess risk factors of industry important in this decision?

Case types..
Capacity Expansion
Usually recognized by questions about firms increasing their output potential
Consider all alternatives: build, expand, outsource, etc.
Determine the growth in overall market, firms market share and trends in demand and market supply
Opportunity cost payback period, break-even point
Estimate the potential benefit for expansion without neglecting the risks associated such as decline in
demand
Summary should be a Cost/Benefit analysis of options
Acquisitions
Probably the easiest to identify: Firm X is thinking of acquiring Firm Y
Start looking for synergies
Understand potential acquirers business: does this fit?
Assess rationale
Increase resources: capacity, distribution reach, broaden product line, etc.
Decrease costs: Economies of scope, economies of scale, learning curve, etc.
Consider competitor response and possible organizational issues
NPV analysis compare costs vs benefits
Alternatives to the acquisition

Case types..
Market Sizing
Recognizable as request to determine the size of an opportunity or market
Market sizing are often a part of a broader issue
E.g. Company X, the worlds leading light bulb manufacturer, obtained a patent for a light bulb
that will never run out. Should they develop this product?
Recommended approach
Find the driver related to the sizing, e.g., Population, households, other markets
Break the problem into smaller pieces
Share the assumptions and estimations clearly with the interviewer
Make calculated and logical guesses
Rounding is ok just be sure to indicate this to the interviewer
Remember to vocalize your calculation
Do not over complicate the problem dig only as deep as you can handle
Market Entry
Recognizable by cases with firms seeking to expand into a new region, business or customer segment
Recommended approach:
Consider the industry and the size (estimate) of the market Assess market attractiveness
Understand the competition
Analyse customer needs to identify potential gaps
Determine if these gaps can be met satisfactorily
Evaluate methods of entry and barriers and duly consider the risks involved
Decide on the best way to become a player start from scratch, acquire an existing player or
strategic alliance with another player
Frameworks..
Profitability Framework (Best for profit related cases)
Profit is defined as Revenue Costs, we have profitability framework as follows:
Profit
Cost Revenue
# of units sold Cost/Unit # of units sold Revenue/Unit
Variable Fixed
Cost Cost
There can be various ways to break revenue and costs into smaller pieces :
Revenue can be broken down based on demographic, location, or product line, etc.
Costs can be split into components such as overhead, salary, rental, etc.
Keep drilling down until you isolate the problem the name of the game is problem isolation
Verify if it is an industry-wide or company specific issue
Case types..
Profitability
Another easily recognized case listen for indication on profit decline
Profit, = [(P-VC) * Q] FC
Use this extended formula so that you do not miss distinction between FC and VC
Breakeven quantity = FC/(P-VC)
Focus on factors which impact each of these variables, listening carefully with clues
E.g. Firm X experienced difficulty in labour relations last year . This is probably indicating a
recent increase in VC due to wage increases
Watch out for cost allocation in firms with multiple products/divisions
Key Points Candidate Should Explore
Costs: Price/cost/volume relationship:

Fixed and variable Plant utilization
Labor costs Quality
Suppliers Economies of scale
Materials Distribution
Customers: Competition:
Price sensitivity Pricing
Segmentation Capacity
Cost-benefit trade-off Basis of differentiation

Case types..
Pricing
Company Objectives Cost Based pricing Will Based pricing
Market Share
Profits
Competitive analysis Cost of goods Added /
Market maturity sold Perceived value
Break even point Willingness to pay
Core/Potential target price sensitivity
Profitability Innovators
Competitor prices
Substitute prices
Cost Reduction
Labour Production Finance
Invest in technology
Cross training of Make customers pay
Consolidate production space to gain
workers sooner faster payment
scale
Cut overtime terms
Reduce inventories
Downsizing? Refinance your debt
Outsourcing activities
Temporary Sell non-essential assets
Renegotiate with suppliers
employee hiring Hedge currency rates
Strategic sourcing

Case types..
The client is a German Electronics company. They have

developed a solar lantern. They have hired us to figure out
whether they should enter the market in India.

Case types..
Pricing
Company Objectives Cost Based pricing Will Based pricing
Market Share
Profits
Competitive analysis Cost of goods Added /
Market maturity sold Perceived value
Break even point Willingness to pay
Core/Potential target price sensitivity
Profitability Innovators
Competitor prices
Substitute prices
Cost Reduction
Labour Production Finance
Invest in technology
Cross training of Make customers pay
Consolidate production space to gain
workers sooner faster payment
scale
Cut overtime terms
Reduce inventories
Downsizing? Refinance your debt
Outsourcing activities
Temporary Sell non-essential assets
Renegotiate with suppliers
employee hiring Hedge currency rates
Strategic sourcing

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Presents

Cracking Case Interview: Methodology and

ConSIG | SJMSOM | Case Interview Frameworks

Questions Asked in Interviews

Guesstimates Business Brain Teasers

Things to Keep in Mind

Think Out Layout a

ConSIG | SJMSOM | Case Interview Frameworks

Analysis of business questions

Most of the times no specific answers are expected.

ConSIG | SJMSOM | Case Interview Frameworks

Ask Key Questions

Clarify major issues by

ConSIG | SJMSOM | Case Interview Frameworks

Issue Issue Issue

Hypothesis Hypothesis Hypothesis

ConSIG | SJMSOM | Case Interview Frameworks

Listen Develop Collect Synthesize Diagnose Prescribe

ConSIG | SJMSOM | Case Interview Frameworks

ConSIG | SJMSOM | Case Interview Frameworks

ConSIG | SJMSOM | Case Interview Frameworks

Frameworks for Case Interviews

ConSIG | SJMSOM | Case Interview Frameworks

ConSIG | SJMSOM | Case Interview Frameworks

ConSIG | SJMSOM | Case Interview Frameworks

ConSIG | SJMSOM | Case Interview Frameworks

Rivalry Competition: Bargaining Power of Buyers:

ConSIG | SJMSOM | Case Interview Frameworks

ConSIG | SJMSOM | Case Interview Frameworks

ConSIG | SJMSOM | Case Interview Frameworks

ConSIG | SJMSOM | Case Interview Frameworks

ConSIG | SJMSOM | Case Interview Frameworks

Profitability Frameworks (Case Based Approach)

What are we going to cover

ConSIG | SJMSOM | Case Interview Frameworks

Profits are declining.

ConSIG | SJMSOM | Case Interview Frameworks

Clarifications to ask in the beginning

Is it industry wide problem?

ConSIG | SJMSOM | Case Interview Frameworks

ConSIG | SJMSOM | Case Interview Frameworks

ConSIG | SJMSOM | Case Interview Frameworks

TOTAL COST = FC + (VC * Number of units)

ConSIG | SJMSOM | Case Interview Frameworks

Concept of Value Chain

ConSIG | SJMSOM | Case Interview Frameworks

Revenue per Number of

Growth Market size Profitability Internal External

ConSIG | SJMSOM | Case Interview Frameworks

Value chain 4Ps

Product Price Promotion Placement

ConSIG | SJMSOM | Case Interview Frameworks

Your client is a drug lord from Mexico

ConSIG | SJMSOM | Case Interview Frameworks

Market Entry Frameworks (Case Based Approach)

ConSIG | SJMSOM | Case Interview Frameworks

ConSIG | SJMSOM | Case Interview Frameworks

Your client is an electronics

ConSIG | SJMSOM | Case Interview Frameworks

Desirability Analysis Is Indian market attractive or desirable?

Feasibility Analysis Is Client capable of doing business there?

ConSIG | SJMSOM | Case Interview Frameworks

Desirability Analysis Is the market attractive or desirable?