Case Interview Frameworks

Overview

Determine Key Develop Gather Data / Make

Develop Options
Issue(s) Hypotheses Test Hypotheses Recommendation

Refine Answer

 As the interviewer describes the situation, think about what are the key issues
facing general managment
 Develop hypotheses
 Decide what data you need to better understand the issues
 Listen to the facts
 Evaluate which facts are critical to the key issues
 Probe for more detail in critical areas
 Use facts and numbers appropriate in building argument
 Summarize options before making recommendation
 State pros and cons - be fact driven

 Make your recommendation

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Case Interview Frameworks
Using Frameworks
 There is no golden rule, more than one framework may be applicable

 Use an appropriate framework

 Do not force a framework

 Be hypotheses driven

 Be prepared to revise your hypotheses

 Mutually Exclusive and Collectively Exhaustive (MECE)

 Listen for clues from the interviewer

 Accept direction from the interviewer

 Display your thinking visually / graphically

 Be transparent in your analysis

 Leave time to summarize and make recommendations

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Case Interview Frameworks
Some General Frameworks
 The Three C’s

 The Four P’s

 Porter’s Five Forces (+govt.)

 Supply & Demand

 The Profit Equation

 Internal - External

 NPV Analysis

Don’t be afraid to create your own framework, as long as it is logical,

appropriate and transparent to the interviewer.

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Case Interview Frameworks
Market Sizing

D e t e r m in e T h e K e y D r iv e r s
B o tto m U p o r T o p D o w n ?

M a k e A s s u m p t io n s

C a lc u la t e
U s e R o u n d N u m b e rs !
C om m on sense check!

A n a ly z e R e s u lt s
I m p lic a t io n s ?

I n c r e a s in g F a c t o r s D e c r e a s in g F a c t o r s

A d ju s t A n s w e r A d ju s t A n s w e r

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 Case Interview Frameworks
Declining Profits

W h a t 's D r i v i n g
t h e D e c lin e ?

G a th e r I n fo r m a t io n

A n a ly z e U s in g
P r o fit E q u a t io n

R even u es E xp enses

P r ic e V o lu m e P r o d u c t M ix F ix e d C o s t s V a r ia b le C o s t s U n u su al E xp en ses

D e c r e a s in g D e c re a s e In c re a s e S e llin g L e s s - A d d e d C a p a c ity ? - R a w M a t e r ia l P r ic e s - W r it e o ffs

C o m p . p re s s u re ? P r o fit a b le I t e m s - L a w s u it s

- M a r k e t C o n d it io n s H ig h e r M a r g . C o s ts
- C o m p e titio n - O r g . D y s fu n c t io n
- O v e r t im e

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Case Interview Frameworks
Increase Profitability

R evenu es C O G S SG &A

P r ic e U n it V o lu m e D ir e c t M a t e r ia l D ir e c t L a b o r V a r ia b le O / H

P r ic e S e n s it iv it y E x is t in g M a r k e t S c a le E c o n o m ie s R e p la c e w / m a c h in e s C o s t A c c tg .
- E la s t ic it y - P r o m o t io n / D is e c o n o m ie s - U n io n ? - A llo c a t io n D r iv e r s
- P la c e - S u p p ly C o n s t r a in t s - D o e s p r ic in g
r e fle c t C o s t

C o m p e t it iv e E n v ir o n . N e w M a rk e ts In v e n to ry M g m t.
- S u b s titu te s - G e o g r a p h ic - C a r r y in g C o s t s
- E c o n o m ie s o f S c o p e - S h r in k a g e

Can we explore economies of scope with entry into adjacent industry?

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Case Interview Frameworks
Increase Capacity?

S h o u ld W e I n c r e a s e C a p a c it y ?

M a rk e t D e m a n d In v e s tm e n t v s . Im p ro v e m e n t

I n d u s t r y C a p a c it y M a rk e t T re n d s I m p r o v e P r o d u c t iv it y A d d C a p a c ity

C o m p e t it o r s P la n s T h re a ts C y c lic a l / S e a s o n a l B o ttle n e c k s A d d s h ift s

E conom y D e s ig n fo r m a n u f. A c q u ir e
G lo b a l C o m p e t it io n
C o n s u m e r ta s te s O u ts o u rc e
S u b s t it u t e s

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Case Interview Frameworks
Customer Turnover

W h a t H a s C h a n g e d in
th e F o llo w in g E n v ir o n m e n ts ?

Com pany C u s to m e r C o m p e titio n R e g u la to ry

P ro d u c t T a s t e s c h a n g in g ? A r e lo w c o s t c o m p e t it o r s D o n e w ta x
I s q u a lit y s a g g in g ? s t e a lin g fr o m u s ? in c e n t iv e s e x is t ?

P r ic e D is p o s a b le in c o m e ? A r e d iffe n t ia t e d c o m p e t it o r s A n y n e w r e g u la t io n s
H a v e s e n s it iv it ie s c h a n g e d ? s t e a lin g fr o m u s ? r e s t r ic t in g t h e u s e o f o u r
O v e r p r ic e d v e r s u s o u r c o m p e t it io n ? p r o d u c t a n d fa v o r in g s u b s t it u e s ?

P la c e D e m o g r a p h ic s o f o u r t a r g e t ? A r e c o m p e t it o r s in t e g r a t in g
I s o u r d is t r ib u t io n g e t t in g s q u e e z e d o u t ? in t o d is t r ib u t io n a n d
A r e C u s t o m e r s C h a n g in g C h a n n e ls ? s h u t t in g u s o u t ?

P r o m o t io n D o n e w s u b s t it u t e s e x is t ? A r e t h e y o ffe r in g o u r c u s t o m e r s
A r e w e s p e n d in g ? s p e c ia l in c e n t iv e s t o s w it c h ?
P u s h v s . p u ll? ( p a r t ic u la r ly w it h s u b s t it u t e s )

H a s p u b lic im a g e c h a n g e d ?

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Case Interview Frameworks
Competitive Response

C u s to m e r C o m p e tito r C om pany
- W h a t d o th e y w a n t? - W h e r e a r e w e p o s it io n e d ? - H o w d o w e a d d v a lu e ?
- H o w d o th e y c h o o s e ? - W h e r e is t h e c o m p e t it io n ?

V a lu e s /T a s te s P r ic e S e n s it iv it y P u r c h a s in g H a b it s P ro d u c t R e s o u rc e s to re s p o n d ? B u s in e s s r e l a t i o n s h i p s

P la c e
S u s b s it u t e s D is p o s a b l e in c o m e D is t r i b u t i o n c h a n n e l C o s t s tru c tu re D is t r ib u t o r

P r ic e
D e m o g r a p h ic c h a n g e s M a tu re m a rk e t? B u n d le d p r o d u c t? T a n g ib l e Vendor

P r o m o t io n
N e w c u s to m e rs ? N o rm a l g o o d ? I n t a n g ib l e C u s to m e r

F in a n c e s

• Given the above, is it worth making a competitive response?

• How will the competition react?
• Applying game theory or PARTS analysis may help.

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Case Interview Frameworks
New Product Introduction?

C u s to m e r C o m p e titio n C om pany
D o e s p ro d u c t m e t a n e e d ? Is th e r e a n y ? C a n w e d o it ?

P ro d u c t Y es No F in a n c e
H a ve w e d o n e h o m e w o rk ? A r e w e a b l e t o f in a n c e t h e l a u n c h ?
W h a t d o e s th e s e g m e n t w a n t? S h o u l d w e b u y a n e x is t i n g p r o d u c e r ?
P r o l i f e r a t io n o f p r o d u c t s a l r e a d y ?

P r ic e O p e ra tio n s
H a v e w e e x p l o r e d s e n s it iv it y ? M any Few A r e t h e r e b a r r ie r s t o e n t r y ? W il l w e b e f i r s t m o v e r s ? D 0 w e h a v e c a p a c it y ?
C a n w e m a k e a p r o f i t a t t h i s p r ic e ? S u p p ly n e tw o rk ?

Is m a r k e t g r o w in g ? W h a t w il b e t h e s t r a t e g y ? Yes A n y p r e c io u s r e s o u r c e
P r o m o tio n L o w c o s t o r D if f e r e n t ia t e d ? C a n w e b e a t th e m ? th a t w e o w n ? M a rk e tin g
P u s h o r P u ll? ( R ic a r d i a n r e n t s ) W i l l w e c a n n i b a l i z e e x is t in g p r o d u c t s ?
C o s t o f la u n c h ? I s t h is a c o m p l e m e n t / b u n d l e d g o o d
W il l c u r r e n t p r o m o t io n s h e l p ? D o e s it b u il d o n r e s o u r c e s ?
C a n w e e a t th e y o u n g ? No
C a n w e e re c t s o m e ?
P la c e
I s d i s t r ib u t i o n a l i g n e d w i t h c u s t o m e r ?
A r e w e e x p e r i e n c e d in t h i s c h a n n e l ?

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Case Interview Frameworks
International Expansion
In te rn a l E x te rn a l Q u a n t it a t iv e

D o e s it m a t c h o u r g r o w t h s t r a t e g y ? C u lt u r a l D iffe r e n c e s o f C u s t o m e r s R O I / H u r d le R a t e
- R O E /R O I - T a s t e s / p r o d u c t p r e fe r e n c e s
- V a lu e s / g e n d e r r o le s

A llia n c e w it h lo c a l fir m ? M e t h o d s o f C o n d u c t in g B u s in e s s
- J o in t v e n t u r e / d is t r ib u t o r - I n tr o d u c tio n s C a s h F lo w s
- G o v e rn m e n t c o n ta c ts

C a n o u r re s o u rc e s s u c c e e d o v e rs e a s ? E d u c a t io n a l D iffe r e n c e s A m ount
- F le x ib le e n o u g h t o a d a p t ?

I s o r g a n iz a t io n c o n s is t e n t E c o n o m y & E x c h a n g e R a te s T im in g
w it h o v e r s e a s 'a u t o n o m y ' - S t a r t u p / d is p o s it io n
- O p e r a t in g

C o r p o r a t e V a lu e s S e a s o n a lit y D is c o u n t R a t e
- B r ib e r y - W e a th e r
W o r k e r 's c o n d it io n s / c h ild la b o r

D is t r ib u t io n s y s t e m
- T r a n s p o r t a t io n in fr a s t r u c t u r e
- D iffe r e n t c h a n n e ls

P o lit ic a l C lim a t e
- I n s t a b ilit y

L o c a l M a rk e t
- S iz e
- C o m p e t it io n

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 Case Interview Frameworks
Investment Decision

I n v e s t m e n t D e c is io n

N P V A n a ly s is O th e r F a c to rs

U s e fu l L ife C a s h F lo w s D is c o u n t R a t e S t r a t e g ic F it S y n e rg ie s E n v ir o n m e n ta l P o lit ic a l C o m p e t it o r s

T im in g - R is k F r e e R a t e - M is s in g L in k s - S e a s o n a lit y S t a b ilit y - C u r r e n t S u p p ly
- O p p o r t u n it y C o s t - I n fla t io n o f V a lu e C h a in - V o la t ilit y R e g u la t io n P o t e n t ia l D e m a n d
- R is k A d ju s t - I n fla t io n
D e m a n d C y c le

S iz e
- M a r k e t P o t e n tia l
- O u tflo w s
- W o r k in g C a p ita l

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Case Interview Frameworks
Company Acquisition
U n d e rs ta n d P u rp o s e
D iv e r s ific a t io n ?
G a in M a r k e t S h a r e ?
G e o g r a p h ic E x p a n s io n ?

A n a ly z e O p p o r t u n it y

In te rn a l F a c to rs E x te rn a l F a c to rs

S t r a t e g ic O b je c t iv e S tre n g th s & W e a k n e s s e s I n d u s t r y A t t r a c t iv e n e s s I d e n t ify A c q u is it io n

C a n d id a t e s

R e s o u rc e s A c q u is it io n F it
P o r t e r 's F i v e F o r c e s S o ft Is s u e s
T h r e e C 's - C u lt u r e / F it
- M anagem ent

H a rd Is s u e s
- P r ic e
- B a la n c e S h e e t

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Case Interview Frameworks
Hostile Takeover Defense

T w o O p t io n s B o t h
D e s ig n e d t o R a is e t h e
V a lu e o f t h e C o m p a n y

S e lf- H e lp W h it e K n ig h t

A r e W e H ig h ly L e v e r e d ? C la s s ic M & A
( R e la t iv e t o t h e I n d u s t r y ) I s t h e r e a F ir m T h a t . . .

Yes N o H a s F in a n c ia l S t r e n g t h

S t r a t e g ic C o m p a t a b ilit y
D o W e H ave C ash ? Is s u e D e b t, B u y B a c k S to c k
C u lt u r a l F it

Yes N o
T h e n B u y B a c k S to c k C a n W e R e le a s e G o o d N e w s
to R a is e S to c k P r ic e t o R a is e S t o c k P r ic e ?

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