Net Present Value:

Net present value (NPV) is the difference between the present value of cash inflows and the
present value of cash outflows over a period of time. NPV is used in capital budgeting and
investment planning to analyze the profitability of a projected investment or project. NPV is the
result of calculations used to find today’s value of a future stream of payments.

NPV = TVECF−TVIC
where:
TVECF=Today’s value of the expected cash flows
TVIC=Today’s value of invested cash

NPV looks to assess the profitability of a given investment on the basis that a dollar in the future
is not worth the same as a dollar today. Money loses value over time due to inflation. However, a
dollar today can be invested and earn a return, making its future value possibly higher than a
dollar received at the same point in the future.

NPV seeks to determine the present value of an investment's future cash flows above the
investment's initial cost. The discount rate element of the NPV formula discounts the future cash
flows to the present-day value. If subtracting the initial cost of the investment from the sum of
the cash flows in the present day is positive, then the investment is worthwhile.

For example, an investor could receive $100 today or a year from now. Most investors would not
be willing to postpone receiving $100 today. However, what if an investor could choose to
receive $100 today or $105 in one year? The 5% rate of return (RoR) for waiting one year might
be worthwhile for an investor unless another investment could yield a rate greater than 5% over
the same period.

If an investor knew they could earn 8% from a relatively safe investment over the next year, they
would choose to receive $100 today and not the $105 in a year, with the 5% rate of return. In this
case, 8% would be the discount rate.

Limitation:

Gauging an investment’s profitability with NPV relies heavily on assumptions and estimates, so
there can be substantial room for error. Estimated factors include investment costs, discount rate,
and projected returns. A project may often require unforeseen expenditures to get off the ground
or may require additional expenditures at the project’s end.
CAPM Model: (Capital Asset Pricing Model):

The Capital Asset Pricing Model (CAPM) describes the relationship between systematic risk and
expected return for assets, particularly stocks. CAPM is widely used throughout finance for
pricing risky securities and generating expected returns for assets given the risk of those assets
and cost of capital.

The formula for calculating the expected return of an asset given its risk is as follows:

ERi =Rf +βi (ERm−Rf)

where:

ERi = expected return of investment

Rf = risk-free rate

Βi = beta of the investment

(ERm −Rf) =market risk premium

The goal of the CAPM formula is to evaluate whether a stock is fairly valued when its risk and
the time value of money are compared to its expected return.

For example, imagine an investor is contemplating a stock worth $100 per share today that pays
a 3% annual dividend. The stock has a beta compared to the market of 1.3, which means it is
riskier than a market portfolio. Also, assume that the risk-free rate is 3% and this investor
expects the market to rise in value by 8% per year.

The expected return of the stock based on the CAPM formula is 9.5%:

9.5%=3%+1.3× (8%−3%)
Porters Five Force Model:

Porter's Five Forces is a business analysis model that helps to explain why various industries are
able to sustain different levels of profitability. The Five Forces model is widely used to analyze
the industry structure of a company as well as its corporate strategy.

Competition in the Industry: The larger the number of competitors, along with the number of
equivalent products and services they offer, the lesser the power of a company. Suppliers and
buyers seek out a company's competition if they are able to offer a better deal or lower prices.
Conversely, when competitive rivalry is low, a company has greater power to charge higher
prices and set the terms of deals to achieve higher sales and profits.

Potential of New Entrants into an Industry: A company's power is also affected by the force
of new entrants into its market. An industry with strong barriers to entry is ideal for existing
companies within that industry since the company would be able to charge higher prices and
negotiate better terms.

Power of Suppliers: The next factor in the five forces model addresses how easily suppliers can
drive up the cost of inputs. The fewer suppliers to an industry, the more a company would
depend on a supplier. As a result, the supplier has more power and can drive up input costs. On
the other hand, when there are many suppliers or low switching costs between rival suppliers, a
company can keep its input costs lower and enhance its profits.

Power of Customers: The ability that customers have to drive prices lower, or their level of
power is one of the five forces. A smaller and more powerful client base means that each
customer has more power to negotiate for lower prices and better deals. A company that has
many, smaller, independent customers will have an easier time charging higher prices to increase
profitability.

Threat of Substitutes: The last of the five forces focuses on substitutes. Substitute goods or
services that can be used in place of a company's products or services pose a threat. Companies
that produce goods or services for which there are no close substitutes will have more power to
increase prices and lock in favorable terms. When close substitutes are available, customers will
have the option to forgo buying a company's product, and a company's power can be weakened.
PIE – The Next Generation of Porter’s Five Forces:

A Five Forces analysis can help companies assess industry attractiveness, how trends will affect
industry competition, which industries a company should compete in—and how companies can
position themselves for success.

1. Bargaining power of suppliers of Kpis Indicators - If suppliers have strong bargaining power,
then they will extract higher price from the Kpis Indicators.

2. Bargaining power of buyers of Kpis Indicators – If the buyers have strong bargaining power,
then they usually tend to drive price down thus limiting the potential of the Kpis Indicators to
earn sustainable profits.

3. Threat of substitute products and services - If the threat of substitute is high then Kpis
Indicators has to either continuously invest into R&D or it risks losing out to disruptors in the
industry.

4. Rivalry among existing players – If competition is intense then it becomes difficult for
existing players such as Kpis Indicators to earn sustainable profits.

5. Threat of new entrants - if there is strong threat of new entrants then current players will be
willing to earn less profits to reduce the threats.

The core objective of strategists and leaders in an organization is to help the organization to build
a sustainable competitive advantage and thwart competitive challenges.

Step 1 – Defining relevant industry for Kpis Indicators in case study

Step 2 – Identify the competitors and group them based on the segments within the industry

Step 3- Assess the Porter Five Forces in relation to the industry and assess which forces are
strong and which forces are weak.

Step 4 - Determine overall industry structure and test analysis of consistency

Step 5 – Analyze recent and future changes in each force

Step 6 – Identify aspects of industry structure based on Porter 5 Forces that might be influenced
by competitors and new entrants.
SWOT Analysis:

SWOT stands for Strengths, Weaknesses, Opportunities, and Threats, and so a SWOT Analysis
is a technique for assessing these four aspects of your business.
You can use SWOT Analysis to make the most of what you've got, to your organization's best
advantage. And you can reduce the chances of failure, by understanding what you're lacking, and
eliminating hazards that would otherwise catch you unawares.

Strengths
Strengths are things that your organization does particularly well, or in a way that distinguishes
you from your competitors. Think about the advantages your organization has over other
organizations. These might be the motivation of your staff, access to certain materials, or a
strong set of manufacturing processes.

Your strengths are an integral part of your organization, so think about what makes it "tick."
What do you do better than anyone else? What values drive your business? What unique or
lowest-cost resources can you draw upon that other can't? Identify and analyze your
organization's Unique Selling Proposition (USP) and add this to the Strengths section.

Remember, any aspect of your organization is only a strength if it brings you a clear advantage.
For example, if all of your competitors provide high-quality products, then a high-quality
production process is not a strength in your market: it's a necessity.

Weaknesses
Now it's time to consider your organization's weaknesses. Be honest! A SWOT Analysis will
only be valuable if you gather all the information you need. So, it's best to be realistic now, and
face any unpleasant truths as soon as possible.

Weaknesses, like strengths, are inherent features of your organization, so focus on your people,
resources, systems, and procedures. Think about what you could improve, and the sorts of
practices you should avoid.

Opportunities
Opportunities are openings or chances for something positive to happen, but you'll need to claim
them for yourself!

They usually arise from situations outside your organization and require an eye to what might
happen in the future. They might arise as developments in the market you serve, or in the
technology you use. Being able to spot and exploit opportunities can make a huge difference to
your organization's ability to compete and take the lead in your market.

Think about good opportunities you can spot immediately. These don't need to be game-
changers: even small advantages can increase your organization's competitiveness. You should
also watch out for changes in government policy related to your field. And changes in social
patterns, population profiles, and lifestyles can all throw up interesting opportunities.

Threats
Threats include anything that can negatively affect your business from the outside, such as
supply chain problems, shifts in market requirements, or a shortage of recruits. It's vital to
anticipate threats and to act against them before you become a victim of them and your growth
stalls.

Think about the obstacles you face in getting your product to market and selling. You may notice
that quality standards or specifications for your products are changing, and that you'll need to
change those products if you're to stay in the lead. Evolving technology is an ever-present threat,
as well as an opportunity!

Always consider what your competitors are doing, and whether you should be changing your
organization's emphasis to meet the challenge. But remember that what they're doing might not
be the right thing for you to do and avoid copying them without knowing how it will improve
your position.

Be sure to explore whether your organization is especially exposed to external challenges. Do

you have bad debt or cash-flow problems, for example, that could make you vulnerable to even
small changes in your market? This is the kind of threat that can seriously damage your business,
so be alert.
The Seven S Framework:

7-S model is used in a wide variety of situations where it's useful to examine how the various
parts of your organization work together.

For example, it can help you to improve the performance of your organization, or to determine
the best way to implement a proposed strategy.

The framework can be used to examine the likely effects of future changes in the organization, or
to align departments and processes during a merger or acquisition. You can also apply the
McKinsey 7-S model to elements of a team or a project. The Seven Elements of the McKinsey
7-S Framework

The model categorizes the seven elements as either "hard" or "soft":

Hard Elements Soft Elements

Shared Values
Strategy Skills
Structure Style
Systems Staff

The three "hard" elements include:

· Strategy.
· Structures (such as organization charts and reporting lines).
· Systems (such as formal processes and IT systems.)

These elements are relatively easy to identify, and management can influence them directly.

The four "soft" elements, on the other hand, can be harder to describe, and are less tangible, and
more influenced by your company culture. But they're just as important as the hard elements if
the organization is going to be successful.

Let's look at each of the elements individually:

● Strategy: this is your organization's plan for building and maintaining a
competitive advantage over its competitors.
● Structure: this is how your company is organized (how departments and teams are
structured, including who reports to whom).
● Systems: the daily activities and procedures that staff use to get the job done.
 ● Shared Values: these are the core values of the organization and reflect its general
work ethic. They were called "superordinate goals" when the model was first
developed.
● Style: the style of leadership adopted.
● Staff: the employees and their general capabilities.
● Skills: the actual skills and competencies of the organization's employees.

Product life cycle curve:

As can be seen from the above picture, the product life cycle has 4 defined stages, each with its
own characteristics that mean different things for businesses that are trying to manage the life
cycle of their particular products.

Stage 1. Market Development

This stage of the cycle could be the most expensive for a company as it launches the product, and
the sales growth is slow as people are aware of the product. Informative advertising is used and
usually profits are low or nil.

Stage 2. Market Growth

Sales start to grow rapidly. Persuasive advertising may be used. At this stage prices may be
reduced as new competitors may enter the market. This is the stage where the profits start to
accumulate and consolidate. This makes it possible for the business to invest in the promotional
activity to maximize the potential of this growth stage.

Stage 3. Market Maturity

During this stage the product is established and the aim for the company is to maintain the
market share they have built up. This is the most competitive time for most products and
businesses need to invest wisely in marketing they undertake. They may further consider making
changes or modifications to the product or improvement to the production process which might
give them a competitive advantage.

Stage 4. Market Decline

Eventually the market for the product will start to shrink, and this is the stage of decline. This
shrinkage could be due to a lot of factors (e.g., market saturation, new technology, better
substitute). While the decline is inevitable, it may be possible for companies to make some profit
by switching to less expensive production methods or cheaper or developing markets.
Strategy Tool:

Having the right tools won't necessarily make you a good mechanic. Nor will having the right
strategy analysis tools make you a good strategist. But they will help a good strategist get the job
done more effectively.

Here is my list of 10 essential tools for strategy analysis:

1. SWOT

The SWOT is the most basic form of strategic analysis. Simply list the organization’s Strengths,
Weaknesses, Opportunities and Threats. (learn more)

2. Porter's Value Chain

The value chain is a simple (graphical) method for identifying and describing a firm's main
functions and understanding how they contribute to value creation. (learn more)

3. The Strategy Canvas

The Strategy Canvas was popularized in the book "Blue Ocean Strategy". You can use it to
understand how a firm differentiates itself from its competitors. (learn more)

4. The Business Model Canvas

Alexander Osterwalder and Yves Pigneur introduced The Business Model Canvas in the book
"Business Model Generation". It is a very effective way of describing the key components of a
business model. You can use it as the starting point for strategic analysis as well as for exploring
alternative business models. (learn more)

5. PESTLE

The PESTEL framework is useful for ensuring that you consider a broad range of possible
sources of opportunities and threats. The letters represent the Political, Economic, Social (or
Socio-economic), Technological, Environmental and Legal opportunities and threats in the firm's
environment.

6. McKinsey 7S

The McKinsey 7S is useful for ensuring that you consider all aspects of the organization when
identifying its strengths and weaknesses. The 7 S’s stand for: Structure, Systems, Style, Staff,
Skills, Strategy and Shared Values.
7. Porter's 5 Forces

Porter's 5 Forces model is another framework for identifying threats and opportunities within the
firm's environment. It considers the bargaining position of suppliers and customers (including
distributors), the threat of new entrants and substitutes, as well as competitive factors within the
industry itself.

8. Pareto Analysis

A Pareto Analysis is based on the maxim that 20% of the products, services, customers, or
distribution deliver 80% of the profits. A Pareto chart is a useful visualization for showing this.
However, its accuracy depends on the reliability of your cost allocation system.

9. BCG Matrix

You can apply the BCG Matrix to any business with more than one product or service line, or
more than one customer segment. Plot the market share against the market growth rate for each
product, service, or customer segment. Then consider strategic options based on their relative
position on the chart.

10. Scenario Analysis

The future is inherently uncertain. Fortunately, good business strategy only requires you to be
able to anticipate the future. You don't need to be able to predict it. Scenario Analysis is a tool to
help you to anticipate multiple different futures. This allows you to construct your strategy
around the premise that you can't be sure which, if indeed any, of them will come to pass.

Framework chart
The Four P’s:

The four Ps of marketing are the fundamental elements involved in the marketing of a product or
service. They are the product, the pricing, the place, and the promotion of a good or service. The
four Ps, often known as the marketing mix, are constrained by internal and external elements in
the broader business environment, and they interact heavily with one another.

Companies use the 4 Ps to identify some key factors for their business, such as what consumers
want from them, how their product or service meets or fails to meet those needs, how their
product or service is perceived in the world, how they differentiate themselves from their
competitors, and how they interact with their customers. Let us understand How the Four Ps
Works-

Product
A product is a good or service that a firm provides to its clients. A product should ideally meet
an existing consumer demand. Alternatively, a product may be so attractive that buyers believe
they must have it, resulting in a new demand. To be effective, marketers must understand a
product's life cycle, and business executives must have a strategy for dealing with products at
each point of their life cycle. The sort of product also influences how much firms can charge for
it, where it should be placed, and how it should be promoted in the marketplace.

Price
The cost that customers pay for a product is referred to as its price. Marketers must link the price
to the true and perceived worth of the product, but they must also consider supplier costs,
seasonal reductions, and competitors' prices. In some circumstances, corporate executives will
boost the price to make the product appear to be a luxury item. Alternatively, they may reduce
the price so that more people can test the product.

Place
When a corporation makes a place/location decision, it is attempting to establish where it should
sell a product and how to convey the product to the market. Business leaders' ultimate goal is to
bring their items in front of the people who are most inclined to buy them. In some
circumstances, this may refer to placing a product in specific stores, but it can also refer to
placing the product on a specific store's display.

Promotion
Promotion examines the various methods by which marketing organizations convey important
product information to consumers and differentiate a specific product or service. Promotion
includes advertising, public relations, and promotional strategy. The goal of promoting a product
is to reveal to consumers why they need it and why they should pay a certain price for it.
Marketers frequently combine promotion and placement aspects in order to reach their target
audiences.
The 4 C’s-

In order to understand the 4 C’s, let us take the example of OLA Scooter which is a newly
introduced product in the market. Thus, it can be explained as below:

Customer: In order to understand who, the customers for OLA electric would be we can use
market segmentation technique. It can be defined as under:

Geographic Demographic Psychographic

Country: India Age: 18+ Lifestyle: Active lifestyle

City: Tier 1 & Tier 2 Gender: All genders

Income: Higher Middle class and Middle class

The purchase criteria for customers could be based on following points:

● Economical option as compared to petrol-based vehicles
● Environmentally friendly since it wouldn’t cause air pollution
● Safe to use
● Technologically advanced features and options available
● Variety of color options available
● No need to worry about servicing since you can get assistance sitting at the comfort of
your home

Competition: In the electric two-wheeler space, Ola faces competition from established
manufacturers Hero, Bajaj, and Mahindra as well as EV start-ups Ather Energy, Okinawa Auto-
tech, and Ampere Vehicles. According to Autocar Professional, Hero Electric, Okinawa, Ampere
and Ather were the top four electric two-wheeler sellers in India last year. The four together sold
just a little over 21,000 units. In FY20, some 17.4 million fuel-dependent two-wheelers were
sold in India. Unlike its core competitors OLA doesn't have a hardcore manufacturing
experience. Also, the company doesn't have dealers, after service workers, training people who
can repair and the overall network strength in the market like its counterparts. Thus, competitors
do have a market advantage.
Cost: Ola realized that to make the scooters available at a competitive market rate it had to
achieve economies of scale. And for that, it built a sprawling 500-acre facility that housed the
suppliers. It is the world’s largest scooter factory where 90 per cent of its components are co-
located. It is also planning to use robots to increase efficiency. This will help the company to
attract consumers with an aggressive pricing strategy. The company intends to produce 10million
vehicles by next year.

Capabilities: For Ola Electric its main competencies lie in its price-value model, Economies of
scale achieved & highly tech-driven vehicle. It is ready to launch an excessively technologically
advanced vehicle with the leading features in an electric market at a very competitive price &
this has been possible to be achieved only to large production capacity. Thus, the company has
positioned itself such as to highlight its capabilities.

To summarize, to apply the 4Cs approach to marketing, you must consider the impact of the
“uncontrollable” elements on your marketing mix. The 4Cs explicitly require you to think like a
customer.

5 Cs of Marketing:
Here are the 5 Cs of marketing analysis of the biggest food joint company – McDonald’s:

1. McDonald Company
McDonald’s corporation is available in 119 countries around the globe. Thirty-three thousand
locations serve around 68 million customers every day! When it comes to McDonald’s as a
brand and a fast-food industry, its sales are high.

McDonald’s is rated number 6 brand by Interbrand. There are a few negative effects of the brand
on people, and, i.e., the issues of obesity, animal cruelty, social platforms commentary, and the
targeted audience involve innocent and manipulative youth. But the brand aims to maximize the
profit with every passing year.

2. McDonald Customers
McDonald’s target audience is based upon the demographic variables, i.e., age and lifestyle. The
heaviest targeted audiences are children and teenagers.

3. McDonald Competitors
The food joint has a lot of competitors in the market. But McDonald’s has never changed the
taste of its food product; therefore, it has been carrying its uniqueness for a long time, and no
other brand has, till now, able to match that level.

4. McDonald Collaborators
In McDonald’s, the three-legged stool philosophy involves the supplier partners as the third leg.
The suppliers owned by the company are beef, meat, and milk that are to be used in its products.
Other suppliers are also included, like the grocery stores that supply fresh vegetables.

5. McDonald Climate
There are many new laws and regulations that come into force rated to the food industry. The
social trends change, and so do McDonald’s changes its trends.

For example: whenever there is a new movie, or there is something that is trending, the brand
targets the children by introducing toys for the children related to the trend.

Value Chain Analysis:

According to Porter, the business of a firm can best be described as a value chain, in which total
revenues minus total costs of all activities undertaken to develop and market a product or service
yields value.31 All firms in a given industry have a similar value chain, which includes activities
such as obtaining raw materials, designing products, building manufacturing facilities,
developing cooperative agreements, and providing customer service. A firm will be profitable so
long as total revenues exceed the total costs incurred in creating and delivering the product or
service. Firms should strive to understand not only their own value chain operations but also
those of their competitors, suppliers, and distributors.

Value chain analysis (VCA) refers to the process whereby a firm determines the costs associated
with organizational activities from purchasing raw materials to manufacturing product(s) to
marketing those products. Value chain analysis aims to identify where low-cost advantages or
dis- advantages exist anywhere along the value chain from raw material to customer service
activities. The VCA process can enable a firm to better identify its own strengths and
weaknesses, especially as compared to competitors’ value chain analyses and their own data
examined over time.

Substantial judgment may be required in performing a VCA because different items along the
value chain may impact other items positively or negatively, at times creating complex
interrelationships. For example, exceptional customer service may be especially expensive yet
may reduce the costs of returns and increase revenues. Cost and price differences among rival
firms can have their origins in activities performed by suppliers, distributors, creditors, or even
shareholders. The initial step in implementing VCA is to divide a firm’s operations into specific
activities or business processes. Then the analyst attempts to attach a cost to each discrete
activity; the costs could be in terms of both time and money. Finally, the analyst converts the
cost data into information by looking for competitive cost strengths and weaknesses that may
yield competitive advantage or disadvantage. Conducting a value chain analysis is supportive of
the research-based view’s examination of a firm’s assets and capabilities as sources of distinctive
competence.
Core Competencies:

Apple a revolutionary company in the minds of all variants of consumers having core competencies and
competitive advantage

1. Innovation

Product innovation created values for Apple Inc. through innovative products and services. Apple started
its business with Apple I, differentiated its products at a regular time period, diversified the business and
now offering software, hardware, consumer electronics, music store, mobile phones, operating system etc.
From 2006 -2012, they have introduced new products like iPhone, iPad, iPod touch, Superdrive, Apple
TV etc.

2. Leadership

Leadership played a vital role at apple, Steve jobs, Tim Cooks followed a mixed combination of
leadership styles like benevolent and democratic. They influenced the persons to perform, innovate and
finish the work with excellence. Steve Jobs was the CEO during 2006 – 2012, most of them admired his
leadership style, expected innovation from each and every of his subordinates

3. Perfection

When comparing to competitive products, the apple products are unique in designs, usage, and quality.
Everyone using the products may be admired with it, can tell the features, style, designs, everything in
perfect condition.

4. User friendly

Apple products especially, iPod, iPhone and iPad are user friendly machines, simple to use, learn and will
be addicted. The reasons behind the usefulness are creativity, thinking of design engineers about the
future and customer expectations. For achieving this, before and after designing they may conduct so
many research and discussions to arrange things perfectly.

5. Human Resources

Most of the companies put contract for their products and services with other firms like Lenovo built with
Intel chips, Windows 7 OS, Nokia with Symbian OS, so many tablet PCs and mobile phones with
Android OS etc. But Apple is launching their products with most of the things inbuilt with their own
outputs. Thus, Apple is having a well-equipped executives and employees from different streams like
Software, Hardware, Design engineers, product Engineers, Mechanical engineers, Management people
etc., It is very tough to convert a designed product to real and customization, but Apple did it with
perfection, well designed and user friendly. The reason behind it is Human resources, a dynamic
capability of Apple.

6. Diversification and Leverage into new market

To sustain the growth, Apple followed the old strategy, popularly called as diversification. From Apple I,
an assembled circuit board, to iPhone they have a wide variety of product categories like Operating
system, Printers, Keyboards, mouses, Fax modem, Power cd, Safari Internet browser and the list is going
on. Diversification in terms of relevant product categories made by leveraging its brand value and
entering the new market is the key strategy adopted since 2001-2006.
Benchmarking and best practices:

A benchmark is a standard against which the performance of a security, mutual fund, or

investment manager can be measured. Generally, broad market and market-segment stock and
bond indexes are used for this purpose. It's an element of a Sigma Six black belt.

Why Benchmarks are Important

Understanding Benchmarks
Benchmarks are indexes created to include multiple securities representing some aspect of the
total market. Benchmark indexes have been created across all types of asset classes. In the equity
market, the S&P 500 and Dow Jones Industrial Average are two of the most popular large-cap
stock benchmarks.

In fixed income, examples of top benchmarks include the Barclays Capital U.S. Aggregate Bond
Index, the Barclays Capital U.S. Corporate High Yield Bond Index, and the Barclays Capital
U.S. Treasury Bond Index. Mutual fund investors may use Lipper indexes, which use the 30
largest mutual funds in a specific category, while international investors may use MSCI Indexes.
The Wilshire 5000 is also a popular benchmark representing all of the publicly traded stocks in
the U.S. When evaluating the performance of any investment, it's important to compare it against
an appropriate benchmark.

Identifying and setting a benchmark can be an important aspect of investing for individual
investors. In addition to traditional benchmarks representing broad market characteristics such as
large-cap, mid-cap, small-cap, growth, and value. Investors will also find indexes based on
fundamental characteristics, sectors, dividends, market trends, and much more. Having an
understanding or interest in a specific type of investment will help an investor identify
appropriate investment funds and also allow them to better communicate their investment goals
and expectations to a financial advisor.

When seeking investment benchmarks, an investor should also consider risk. An investor's
benchmark should reflect the amount of risk they are willing to take. Other investment factors
around benchmark considerations may include the amount to be invested and the cost the
investor is willing to pay.
2x2 Matrix:

The 2×2 Matrix is a visual tool that consultants use to help them make decisions. The
technique involves creating a 2×2 matrix with opposing characteristics on each end of the
spectrum. The team then sorts their ideas and insights according to where they fall in the matrix.

• 2x2 Matrix is a decision support system where sites are selected for a two-dimensional matrix.

• Also known as a blocker or fourth magic spell.

• A matrix diagram is a simple square divided into four equal quadrants.

• Each axis represents a condition of decision, such as cost or effort

• Each axis is divided into two categories (for example low cost / high cost and easy / difficult).

• This makes it easier to visualize less expensive and easier options, with lower costs and harder.
BCG Matrix:

It is designed to help plan long-term strategies, help businesses look at growth opportunities by
reviewing their product portfolio to determine where to invest, stop or improve products. Also
known as the Growth / Share Matrix.

1. Dogs:

• These are products with low growth or market share.

• Its purpose is to remove any dogs from our product portfolio as it is the backbone of resources.

2. Question mark:

• High-growth products with low market shares.

• It requires significant investment to push them into the star quadrant. The challenge is that
more money can be invested to get it back

3.Stars:

• High-growth market products with high market share.

• It can be a market leader even though it needs continuous investment to be sustainable. They
produce more ROI than other product categories.

4. Cash Cows:

• Products in low growth markets with high market share

• Usually ripe, well-established products

Case Study:

2. You are the consultant to a company that produces large household appliances. Over the
past three years, profit margins have fallen 20 percent and market share has tumbled to 15
percent of the market from 25 percent. What is the source of the company’s problem?

Solution:

The company’s profit margin has fallen by 20 percent and market share has reduced by 10
percent. This is because the company hasn’t updated the manufacturing process since 1988. They
manufacture all their products in the United States. The company isn’t able to compete with their
competitors' products in the market in terms of price because of manufacturing in the United
States and not updating the manufacturing process for a very long time. Company needs to
update the manufacturing process as soon as possible.

Also, the company's competitors are producing their products in other countries. Producing in
other countries can save the company some costs and gain some competitive advantages.
The company only gives discounts on their products as a part of their promotion strategy twice
in a year. The company can focus more on getting into the promotion strategy to capture more
market share and make more customers aware of the products.
Case Study:

3. Banking on Savings

Q. What is FVP and how to calculate that?

Ans. Full Value Procurement is a rationalization across business units of common purchases
and services. It is the amount of “spend” reduced, that is cost savings realized by reducing the
number of sources from which common products/services are purchased.

Q. In your company do the employees from business and service units share the
equipment’s?

Ans. We have most common office products shared across all our functions. All the units co-
operate and work together.

Q. From where do you buy the products for your company?

Ans. Generally office products from OfficeMax’s corporate services in Indiana, Avery
Dennison corporate services in California

Q. Is your bank currently planning for a merger or acquisition in order to broaden the
target audience?

Ans. No, currently the bank is only concentrating on growing its own customers in organic way
and not depending upon the customers through a merger/ acquisition.

Q. Does the bank outsource any of the services?

Ans. No. As a bank we have lot of confidential information which cannot be shared with any
other organization. Hence, we focus on improving our internal functions.
Case study:

5. Your niece approaches you and says, since you are a management consultant, maybe you
can help me. I want to buy my mother a present for her birthday, and I was thinking of
opening a lemonade stand to earn the money. Tell me what you think of my plan.

Solution.

As mentioned in case, a girl wants to gift her mother a present on her birthday for which
she thinks of selling lemonade. On paper the ideas look good considering in 4 weekends in 3
months she has to sell 37 gallons of lemonade but as mentioned in case the lemonade stand has a
reputation for relatively poor lemonade apart from that there are also several things to do like
installing a setup, advertising (word of mouth), etc.

The sale of lemonade also depends on the geographical location where you are setting up
your stand as railway stations and areas near sports complex are the most preferred area where a
lemonade would be sold easily as compared to commercial areas. Case also emphasis on the fact
that the lemonade made from powder is not the preferred choice of most people so in order to
have a competitive advantage or to attract more people she should try using fresh squeezed
lemons for making lemonade. Though the profit margin on squeezed lemons will be less but it
would eventually attract more and more customers which will result in large volume sales.

She should also try selling different products like cookies, brownies if in case she finds it
difficult to earn enough from lemonade business in expected time. As the main objective is to
earn money irrespective of the product from which she earns the most.
Case Study:

8. Taking the Wing

Q1) Have you done market research on frequent travellers and among your loyal
customers?
Ans: Yes, I have carried out market research on my loyal customers as well as carried a survey
on frequent travellers not necessarily from our airlines just to understand what kind of services
one expects under such a program.

Q2) Are you planning to provide this service for people travelling to certain places or do
you have some other criteria?
Ans: For the time being we are planning to make this “frequent flyer” program available for
those who travel more than 15 hours a month for more than 1 year. If they fail to comply with
the criteria, we would ask them to pay and stay signed in to the program to reap the benefits.

Q3) What kind of additional services/offerings are you planning to provide your customers
under this loyalty program?
Ans: Besides providing free flights during redemption we will provide them special membership
of lounge and also provide discounts on some of the other services such as car rentals. We will
also have a separate help desk for such customers so that they are queries are quickly resolved
and we get them top-notch service.

Q4) How do customers sign up for this program? Are there any specific criteria to be
eligible to avail of this service or a customer can pay certain fees to enter the loyalty
program?
Ans: Customers can go on the website and register themselves for this program if they are
eligible by paying for an annual membership. They can also apply for membership offline at any
of our help desks. Flyers who do not fulfil the criteria cannot apply for the membership.
However additional members can be added with additional fees.

Q5) Will you call the selected customers or conduct a promotional campaign to provide the
services
Ans: Those who are qualified will get the call from our executive regarding the up-gradation.
We also want to promote this program to other mediums such as television, magazine but our
major focus would be to promote at major airports which receive higher traffic (Mumbai, Delhi
etc)
Q6) How will the points be calculated and how can the customers redeem them?
Ans: The points shall be calculated based on the number of hours. Their membership accounts
will be credited with base points each time they manage to travel 15 hours a month and the
points will increase based on the extra hours they travel that month. Points shall be credited
monthly and the customers can get 1 free flight a year (*few miles).
Case Study:

16. You represent a major food manufacturer. You have been asked to assess the potential
acquisition of a premium priced flour company based in the southeast. The asking price is
$130 million. The company's profit after tax this year is $11.2 million. You have audited
financial information and you can do interviews.

Ans:

So, the first question can be regarding the synergies between the companies like for example
what the work culture is there, how is operating cycle period etc. So, after analyzing this and if
the synergies match, then we will go ahead with the further price.

Next process is to analyze whether the company is fairly priced or not and to do so we will use
different valuation techniques like Discounted Cash Flow method, Capital Asset Pricing Method
etc. So, after doing this if we get the valuation to be as close to the asking price then we will
proceed to the next step and if it is not then there can be a negotiation round.

Before starting with the negotiation round we will ask the company to provide us details about
different factors like distribution network, Market share, type of customers etc. We will also
analyze debt and other liabilities the company has, and we can also question them regarding the
liabilities.

Then after analyzing all these factors, we can come to a sound conclusion and can make an
effective decision whether to buy the company or not.
Case Study:

21. Our client, ABC Airlines, is losing money. Why?

Let us understand the mind map of ABC Airlines -

Following could be the reason for decline in ABC Airlines –

1.High Fixed and Variable Costs

• Leasing costs - Airlines are pieces of expensive equipment, and airlines should continue to
make large leases or pay off regardless of business conditions.

• Personnel costs - Airlines also require large personnel to perform their complex functions,
making the cost of salaries one of the fixed costs to be incurred on a monthly basis.

• Lack of Hedging - Oil price volatility is another challenge as to who ABC Airlines will lose.
The idea of a fuel packing system is that by capping prices at its most flexible cost, airlines can
protect themselves from rising fuel prices. The savings can be used to invest in new aircraft, to
improve performance.
• Taxes - Fuel is highly taxable, making flight life very difficult and unaffordable
send these costs to the buyer which will increase the cost.

2. Poor Service - Long queues due to entry procedures, overcrowded seats, inconsistent
schedules, poor service delivery - could be a few reasons why a pilot complains about ABC.

3. Compliance Requirements The aviation industry remains under the radar of DCGA and
security departments. It costs a lot of money and a working head to ensure safety before every
move. This makes the operation of the aircraft very difficult as they have to meet all compliance
requirements

4. Wrong Model Selection The point-to-point network connects directly to a set of locations
without interruption of services (e.g., downloading or leaving) even if the route itself may be
incorrect. The (clean) hub-and-spoke network connects everywhere with a single connector
location called a hub. As a network structure, Hub-and-spoke allows for greater flexibility within
the transport system through flow integration.