The Consulting Handbook 2022

Prepared by Senior Club Coordinators, Socrates and the

Consulting Preparation Mentors at IIFT Kolkata, Batch of ‘23

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Socrates SCC Team, IIFT Kolkata, ‘22-’23

Meet the team!

Rohit Roy Nikhil M S Rajat Kumar Jindal

Senior Club Coordinator Senior Club Coordinator Senior Club Coordinator

“True perfection is a bold quest to seek. Only the willing and true of heart will seek
the betterment of many.” - Socrates

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Consulting Preparation Mentors Team, ‘22-’23

Meet the team!

Sankalp Tandon Aditya Karmakar Priyanshaa Ohri Raghavendra Gade

Mentordeep sea Mentordeep sea Mentor and ex-JCCeep Mentordeep sea
sea

“Spectacular achievement is always preceded by unspectacular preparation” - Robert H. Schuller

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Consulting Preparation Mentors Team, ‘22-’23

Meet the team!

Chandan Kumar Jha Shreyan Hore Rajat Kumar Jindal Rohit Roy
Mentorsea Mentor and Coordinator Mentor Mentor

“Do not go gentle into that good night, Old age should burn and rave at close of day; Rage, rage
against the dying of the light.” – Dylan Thomas

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 Contents

Basic Concepts And Overview Of Firms And Guesstimates Frameworks : Non-Case Presenting Important Terms &
Introduction Roles Specific Results/Communication Formulae

01 02 03 04 05 06 07 08 09 10 11 12

Classification Of MECE Value Chain of Different Frameworks : Case Pyramid and STAR Appendix
Consulting Firms Industries Specific Approaches
old, butter and ripe
lemons

"The essence of strategy is choosing what not to do." — Michael E. Porter

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 Basic Concepts And Introduction
Who is a Consultant?
A consultant is someone who has some level of expertise that a particular group of people find valuable, and people within
that group are willing to pay the consultant to access their expertise. In short, a problem solver!

Why are Consultants needed?

SPECIALISED SKILLSET REPEATABILITY

There are many types of consulting companies, and each

possesses a particular set of skills that encourage
businesses to seek their knowledge and advice.
Businesses will either seek to use these skills in a one-off
project or keep them on retainer until their services are
required, as needed.
Although every scenario is unique, knowing how to use
previous tactics and adapt them to the new situation is an
invaluable skill that enables consultants to better solve
business problems that their clients face.

Skills preferred in Management Consultants

PROBLEM IDENTIFICATION PROBLEM SOLVING

• Secondary Research • Quantifiable Impact

• Problem Breakdown • Primary Research • Structured approach • Feasibility, Implementation
• Data Analysis • Clear, Concise presentation
Classification Of Consulting Firms
 Overview Of Firms And Roles
STRATEGY
CONSULTING
Deals with broad problem
statements at corporate level
viz. long-term vision, portfolio
of businesses, market entry,
pricing etc.
Client SPOC: CEO, President of a
division of the company, and
occasionally the board of
directors
Firms: McKinsey & Co, BCG, Bain
& Co, Ronald Berger
OPERATIONS
CONSULTING
Deals with problem
statements at functional
level viz. throughput of a
plant, reducing costs,
increasing productivity
etc.
Client SPOC: Functional
Heads, VP of a division
Firms: McKinsey & Co, BCG,
Bain & Co, Big 4 consultants
IMPLEMENTATION
CONSULTING
Deals with the implementation
part of the problem i.e. they
determine how to do it and
facilitate in implementation
Client SPOC: Functional Heads, VP
of a division, Business executives
Firms: Big 4 consultants, IBM,
Capgemini, Accenture, McKinsey
MECE
Mutually Exclusive and Collectively Exhaustive

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What is MECE?

Definition Illustration

Mutually Exclusive
Mutually exclusive simply means the
ME segments/subdivisions have no
overlapping parts

Not - Mutually Exclusive Mutually Exclusive

Collectively Exhaustive Collectively Exhaustive

A B C
Collectively exhaustive means that all
CE the segments/subdivisions taken ABC
together should be equal to the total
problem/universe A B Not-Collectively Exhaustive
ABC
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Exercise 1
Identify if the following illustrations are ‘MECE’ or not:

Illustration Result

1 NOT MECE: This is because the segments A, B, C are

A C mutually exclusive but not mutually exhaustive
B

NOT MECE: This is because the segments A, B, C are

2 neither mutually exclusive nor mutually exhaustive
A C
B

MECE: This is because the segments A, B, C are do

3
not overlap (mutually exclusive) and together cover the
A B C complete universe

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Importance of MECE (1/2)
Consider the following example:
During a survey conducted by a marketing research company, it was found that out of the 40 people surveyed, 30
people ranging from ages between 20-65 have had COVID at least once in the past 6 months. The age details of these
30 participants have been detailed below. Your task is to identify how many such participants have ages between 30-50.

Illustration 1 Illustration 2 Illustration 3

21 32 43 54 65 22 6
20-29 21 22 23 24 25 26 20-29

33 44 55 64 23 34 6
30-40
30-40 33 32 37 36 35 34
6
45 56 63 24 35 46 41-50

41-50 45 44 43 48 47 46 12
57 62 25 36 47 58 51-65

54 55 57 56 61 62 63 64
61 26 37 48 59 60 51-65
59 65 60 58 12
Importance of MECE (2/2)
From the illustrations in the previous slide (screenshot at the side for
reference), it is clear that illustration 3 is the most intuitive and allows
us to easily digest the information being conveyed leading to the
answer to the question asked.

The Why? The So-What?

• Systematic problem • Ensures all the objectives
solving for complex of the problem statement
problems are covered
• Eliminate confusion and • Saves time by reducing
focus on key data points redundancy and concise
approach
• Avoids duplication and
redundancy
How to? – Choosing MECE Categories (1/3)
Usually, MECE is an iterative process and creating the right categories requires repetition for refining the answer. Below are
some of the best practices which would help to define the correct categories:

1 The Elements of a Set Cannot Overlap

If items appear in multiple categories, the framework will not work correctly. Take time to think of any atypical situations that
may put a person in more than one category.

Example:
In the illustration mentioned in the
previous section, if the buckets
would have been 20-30 and 30-40,
instead of the illustration shown on
the left, the person with age 30
would have been double counted.
In that case, the categories would not
have been MECE
How to? – Choosing MECE Categories (2/3)

2 The Sum of Parts Must Equal the Universe

For a framework to be collectively exhaustive, it must represent the whole group. This may require considering typical
customer use cases.

Example:
A restaurant might have walk-in, online, and drive-through customers. They may also have customers who order through
third-party apps like Uber Eats or Door Dash. These customers must also be represented.
How to? – Choosing MECE Categories (3/3)

3 Rule of 3

The “Rule of Three” describes the fact that sets of three items tend to be memorable and intuitive.
Although this is not an absolute requirement of MECE, it is easiest for people to remember sets containing four items or
fewer. This will make the framework easier to understand.
Example:
Taking the example of the restaurant again, the customers can be segmented based on their buying frequency – the
number of separate orders placed monthly. Applying the rule of three, it becomes intuitive to make three categories as
follows:

a High: Customers ordering 10+ times a month

Note: Here the number of orders given by the
b Medium: Customers ordering 5-10 times a month customer per month makes the categories
exclusive as well as exhaustive
c Low: Customers ordering <5 times a month

4 Check for Logical errors and inconsistencies

Issue Tree
Issue trees are the most important application of the MECE framework, where the problem is sub-divided into smaller parts
and help in ‘divide and conquering’.

The issue tree is also very useful for prioritizing the solution which has been created. Moreover, the issue tree helps provide
structure to the approach to problem solving and is used in almost all of the case interviews. A skeleton of an issue tree is
given below:
Sub-issue #1A
Issue #1

Sub-issue #1B

Problem / Hypothesis
Sub-issue #2A
Issue #2

Sub-issue #2B

Sub-issue #3A
Issue #3

Sub-issue #3B
 Exercise 2 - Revenue
Question: You are a consultant for a retail chain which operates only out of brick-and-mortar store. Client wants you to
help them increase their revenue by 2X. Design a MECE framework to approach the problem. (Note – Only framework
design explored, not the complete solution)
Solution:

Increase in Revenue

Increase Revenue from

Introduce new stores
existing stores

Solutions for this bracket

Increase avg revenue Increase # of
per customer customers

Solutions for these two brackets 18

Exercise 3 - Profit
Question: You are a consultant for a bank. Client wants you to help them increase their profits. Design a MECE
framework to approach the problem. (Note – Only framework design explored, not the complete solution)

Solution:

Increase in profit

Decrease costs Increase revenue

Solutions for this bracket

Direct Costs Indirect Cost

Solutions for these two brackets 19

Exercise 4 – Value Chain
Question: A cola manufacturing company has recently observed an increase in their cost. You have been hired to
analyze their process and help them reduce the cost. Design an approach to the problem. (Note – Only framework
design explored, not the complete solution)
Solution:

Raw Process- Storage and Customer

R&D Sales Marketing
Material ing Transport Service

Explore cost headers under each

branch of the value chain to
understand the cost drivers

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Guesstimates
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 Guestimates: Tips

Points to Remember
• Clarify the scope of the problem
• Think of alternatives (Supply & Demand, Optimal Solution?)
• Confirm the assumptions
• Have a logical reasoning for what segmentation you are considering
• Depending upon the nature of the case, you can find a bottleneck
• Do not over complicate your calculations
• Keep in mind 4 key filters to zero in on the exact consumer segments –
(1) Rural-Urban Split (2) Gender Split (3) Age Split & (4) Income Split
• Remember approximate numbers for each of the categorization

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 Guestimates: Approaches

Top-Down Approach Bottom-up Approach

Approach that involves starting with an entire population (in Approach that involves starting with unit elements like
other words, the “top” level) and then breaking it down until Revenue per customer, unit cost etc and work your way up
you arrive at an answer. to the final answer.

Example: Calculate the number of School teachers in Mumbai Example: Monthly revenue of a Hair saloon

Population of Mumbai
Revenue per customer: Rs 200 (Average Ticket Size)
~ 2 Crore

%age of School going Kids (30% of the population) Avg. Number of People Visiting the saloon per day:
60 Lakh 20 People

Out of this only 50% get a chance to go to school

Revenue for a week: 20 x 7 x 200 = 28000
30 Lakh

Assuming 50 Students per class, and consider each class

Monthly Revenue: 28000 x 4 weeks = Rs 1,12,000/-
has a teacher = 30L/50 = 60,000

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Guesstimate : Numbers to remember

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Exercise – Application of MECE in guesstimates (1/2)
Question: Estimate the number of smartphones currently in India. (Note – Only framework design explored, not the
complete solution)

Solution:

While this problem can be approached in a number of ways, one of the ways would be segmenting the households of India
by income and estimating the number of smartphones accordingly. Details below:

Population of India –
150 Cr

Number of Households – * Assuming 5 persons per household on an average

30 Cr
Segmenting based on income

Upper – 10% Middle – 30% Lower – 40% BPL – 20%

Estimate the solution for each bracket 25

Exercise – Application of MECE in guesstimates (2/2)
Question: Estimate the number of people who have got booster dose of vaccination in India (Note – Only framework
design explored, not the complete solution)

Solution:

Again, while this problem can be approached in a number of ways, one of the ways would be segmenting the population of
India by rural/urban and further dividing the population there by age groups. Details below:

Population of India –
150 Cr

Rural Population (70%) Urban Population (30%)

Segmenting based on age for both rural and urban

0-17 years – 18-45 years – 45+ years –

20% 50% 30%

Estimate the solution for each bracket 26

Value Chain
Value Chain and Specific Industry Analysis

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 Industry Overview and Value Chain

Value Chain
Looking at a company’s value chain gives you a closer look at the infrastructure that links the company’s processes
together. Many interview cases test your understanding of the flow in which raw material is delivered, assembled into
“the product”, shipped to the market, then marketed and sold to customers. Asking a number of insightful questions on
the effectiveness and efficiencies of certain steps in the value chain would display insightful understanding of the
internal workings of the company. A typical value chain of an industry consists of the following activities:

Outbound Logistics Sales & marketing Services

Inbound Logistics Operations
(Delivery) (Customer Acquisitions) (Customer Retention)
(Raw Materials)
Relationship with Method & effectiveness of Free repair hotline;
suppliers; JIT delivery; Labor & capital utilization; Channels of distribution; marketing; cost of warranties; bonus plan;
cost structure of raw cycle time; quality intermediaries customer acquisition; frequent customer
material sales force issues discount

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 FMCG Industry

Product Transport & Warehouse &

Value Chain

Procurement Manufacturing Consumer

Development Production planning Logistics Distribution
Consumer insights & Warehouses, cold and scheduling, Transport Retail outlets, Cash
storage and silos, optimization Location analytics, &
analytics, improving efficiency, and
Inventory and fulfilment routing, and last mile Carry, supermarkets,
existing products, quality
Management intelligence delivery and E commerce
R&D management

Key Terminology Emerging Trends Growth Drivers

• SKU: Stock Keeping Unit – Refers to unique item
sold in a store
• In-stock: Percent of items that are on the shelves
and available for sale vs. what the total display can
hold
• CRM: Customer Relationship Management:
Strategy & tools designed to boost profitability and
strengthen customer loyalty by using data –also the
name for software that facilitates this
• Loss Leader: Merchandise sold at a loss to attract
new customers or stimulate other profitable sales
• Mark-up: Percentage added to the cost of product
to get selling price
• Big Data: Consumer companies & retailers are
ramping up the use of consumer shopping behavior
data now more than ever to create curated/
personalized shopping experiences and targeted
advertisements
• branded products in categories like instant foods will
Retail Omnichannel: Large brick & Mortar retailers
are pivoting to an “order online, pick-up in store” mix
while also building out their online fulfillment
capabilities to cater to the consumer. and keep up
with Amazon). Store foot-prints are also getting
smaller to reduce inventory
• Direct to Consumer vs. In-store Experience:
Brand names are slowly shifting resources to sell
directly to consumers as some retailers struggle.
Retailers with large brick & mortar footprints are
focusing on in-store experiences to attract customers
• Organised Market: Organised sector growth is
expected to grow with increased level of brand
consciousness. Growth in modern retail will augment
the growth of organised FMCG sector.
• Increased Penetration: Low penetration levels of
attract investors as the FMCG products have demand
throughout the year.
• Rural Consumption: Rural consumption will increase.
Due to combination of increasing incomes and higher
aspiration levels, there will be an increased demand
for branded products in rural India
• Easy Access: Internet and different channels of sales
has made the accessibility of desired product to
customers more convenient at required time and place
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 Pharmaceuticals Industry

Research & APIs Chemicals Manufacturing & Marketing & Distribution

Storage & Shipping
Packaging
Value Chain

Development
Research, Pre-clinical
Trials, Clinical Trials,
Approval,
Government Mandates,
Regulation and Price
Control
Procurement,
Suppliers, Inventory
Management, and Cold
Storage Units
Manufacturing
Infrastructure, Technology Warehousing, Distribution Sales Force, Channels,
License to Produce, Network, and Out Stockists, Strategy
Production Planning and bound Logistics
Scheduling, Packaging,
and Quality Control

Key Terminology Emerging Trends Growth Drivers

• Orphan Drug: A pharmaceutical drug that remains
commercially undeveloped due limited potential for
profitability as a result of a small curable population
size
• FDA: “Food & Drug Administration” Federal
organization tasked with protecting and promoting
the safety of food and pharmaceuticals in the US.
FDA approval is needed for almost all drugs sold in
the US
• Generic Drugs: A prescription drug that has the
same active-ingredient formula as a brand-name
drug but sold at a cheaper cost. –Typically occurs
when name branded drugs lose patents
• API: Active Pharmaceutical Ingredient -
biologically active component of a drug product that
produces the intended effect
• Smart Technology & Data: Data on a patient’s
background and conditions allow more
personalization options, targeted treatments, and
faster recommendations at hospitals
• Gene Therapy: The transplantation of normal genes
into cells in place of missing or defective ones in
order to correct genetic disorders. –Growing trend
using CRISPR to treat previously uncurable diseases
• Wearable Medical Devices: Activity trackers help
patients stay more active and healthier on their own
while also monitoring health metrics reducing the
need to visit doctors frequently
• Increased Healthcare spend: More and more Indian
middle class families are choosing for health
insurance facilities thereby gaining access to quality
medical facilities. This contributes towards high
spending on expensive drugs.
• Prevalence of Lifestyle disorders: The Indian
population is expected to grow at 1.3% every year.
This rise coupled with ever increasing lifestyle
disorders like diabetes, depression etc. together
contribute to noteworthy rise in patient pool attracting
more spending on generics as well as patented
medicines.
• Government Initiatives: Regulations and initiatives
like Drug Price Control Order, National
Pharmaceutical Pricing Authority, Patents
(Amendment) Act 2005. 30
 Banking and Financial Services Industry (BFSI)
Front Office Middle Office Back Office
Value Chain

Risk management; compliance; client Sales order creation; Trade order Asset services, Fund accounting, Portfolio
reporting; regulatory reporting; billing; management; Order execution; Portfolio accounting; Security setup & pricing; Trade
reconciliation management; Market research settlement

- Funding Deposits, Scrutinization, Credits - Payment

Products - Investments Credits, Securities Transactions - Trading
- Services Account Management, Asset Management, Custodian, Issuance/IPO - Clearing & Settlement

Key Terminology Emerging Trends Growth Drivers

• AUM: Assets Under Management: Market value of all
the financial assets that a firm manages on behalf of all
of their clients and themselves. –Includes capital raised
by investors and leaders of a firm
• Private Equity: Composed of investors and funds that
invest directly into private companies or convert public
companies to private companies to improve the target
company’s operations and financials with the goal of
extracting a financial return from the company and
reselling it another firm or the public at a profit
• M&A: Mergers & Acquisition: Mergers are when two
companies comes together to make a new entity (Dow
Chemical & Dupont) = DowDuPont, while an
acquisition is where the smaller company is consumed
by the larger company (Amazon + Wholefoods) =
Amazon
• Digital-Only Banks & Payments: The prevalence of
more digital transactions have eroded the need for
cash for most daily use, which has in turn lead to the
proliferation of online banks that offer higher savings
account interest rates and comparable services
• Financial De-regulation: Congress passed
legislation easing some of the restrictions from Dodd-
Frank that exempts smaller banks from certain
capital requirements which frees up room for more
loans
• AI, Block-Chain & Crypto Currencies: Digital
distributed ledgers offer a cheaper and more efficient
way for firms to verify and facilitate transactions.
Crypto currencies have proven themselves to be an
alternative set of asset investments that rival equities,
precious metals, and debt holdings
• Rising per capita income: The rising per capita
income will drive the growth of retail credit. With an
increase in disposable income and increased
exposure to a range of products, consumers have
shown a higher willingness to take credit,
particularly, young customers.
• Digitization and a fast-emerging new
ecosystem: India’s financial and demographic
landscape has witnessed a considerable change
over the last few years, with the growing number of
fintech companies emerging. These companies
have transformed the digital payments and lending
markets, thereby indicating an increase in
digitalization.
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 Information Technology
Customer Customer Need
Operational Setup Design & Develop After Sales Service
Value Chain

Acquisition Analysis

Infrastructure Setup,
Capability Development,
Employee Operations
Customer Pitches, Client
Acquisitions, Cross
Selling, Value Realization
Update Handling,
Product/Service
Requirements Analysis, Technology Support,
Development, Testing &
Augmentation, Feature Relationship Management
Validation, Delivery &
Translation, Methodology and
Deployment
Recurring Sales/Purchase

Key Terminology Emerging Trends Growth Drivers

• IP (Intellectual Property): A category of property
that includes intangible creations protected by
trademarks and copyrights (e.g. software,code,
algorithms, etc.)
• Unicorn: a start-up company valued at more than a
billion dollars, typically in the software or technology
sector
• Freemium: A pricing model used by many digital
services, a “freemium” model is one where the
majority of users are able to engage with a product or
service entirely for free (perhaps in exchange for data
collection or being served advertisements)
• SaaS: “Software as a service” -a software distribution
model in which a third-party provider hosts
applications and makes them available to customers
over the Internet –Like Salesforce or Workday
• 5G Network Service: Next generation of mobile
internet connectivity with faster speeds, more reliable
connections, and 100x more bandwidth capacity than
4G.
• Network Consolidation: The third and fourth largest
cell phone carriers T-Mobile and Sprint are in the
process of merging, a move that will consolidate the
telecom market to 3 major players
• Content Integration: High profile acquisition like
AT&T of Time Warner and Verizon of Yahoo illustrate
a push to either get into the content creation game or
to build out their advertising network
• Taking cloud and everything-as-a-service to the next
level. As more companies embrace cloud and service-
based IT to drive innovation and transformation, and as
XaaS providers multiply, more work will be needed to
manage the technical and operational complexities of
hybrid, multi-cloud approaches.
• Creating the supply chains of the future. As technology
companies continue to recover from pandemic-induced
supply chain disruptions, they will start proactively
preparing for future uncertainty and other systemic risks.
To do it, they’ll build systems with better visibility and
resiliency.
• Leading the charge to create a sustainable future.
Although the tech industry is working to address critical
sustainability issues, growing pressure from stakeholders
and potential changes to environmental, social, and
governance (ESG) reporting rules will incite tech
companies to heighten their focus on reducing and
reversing environmental impact.
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Non-Case Specific
Frameworks
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 1.
SWOT ANALYSIS

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SWOT ANALYSIS
Who is a SWOT Analysis?
It is the evaluation of a company’s Competitive Position and strategic planning decisions – investing, divesting, diversification etc.
Assessment of internal and external Factors along with current and future potential.

STRENGTHS WEAKNESSES
What is our competitive advantage? Where can we improve?

What resources do we have? What products are underperforming?

What products are performing well? Where are we lacking reources?

What technologies can we use to improve

operations? What new technology threatens operations?

Can we expand our core operations? What do our competitors do well?

What new markets can we explore? What consumer trends threaten business?

OPPORTUNITIES THREATS

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 2.
PESTEL ANALYSIS

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PESTEL ANALYSIS
Who is a PESTEL Analysis?
Evaluation of the external environment in which the firm operates
Factors of Evaluation – Political, Economic, Social, Technological, Environmental and Legal Framework
Assessment of new market initiatives, new product development while keeping into mind the enterprise risk, opportunities environment

Political Economic Social

•Corporate taxation •Interest rates •Demographic considerations
•Other fiscal policy initiatives •Employment rates •Lifestyle trends
•Free trade disputes •Inflation •Consumer beliefs
•Antitrust and other anti-competition •Exchange rates •Attitudes around working conditions
issues

Technological Environmental Legal

• Automation • Carbon footprint • Industry regulation
• How (R&D) may impact both • Climate change impacts, • Licenses and permits required to
costs and competitive including physical and operate
advantage transition risks • Employment and consumer
• Technology infrastructure • Increased incidences of protection laws
(like 5G, IoT, etc.) extreme weather events • Protection of IP (Intellectual
• Cyber security • Stewardship of natural Property)
resources
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 3.
PORTER’S FIVE FORCES

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Porter’s Five Forces
What is Porter’s 5 forces?
• Developed by Michael Porter – considered a macro tool in business analytics – it looks at the industry’s economy as a whole
• Helps in understanding both the competitive forces at play and the overall industry structure- crucial for effective, strategic decision-
making, and developing a competitive strategy
• In comparison, SWOT analysis is a microanalytical tool, focusing on a specific company’s data and analysis.

1. Competitive Rivalry 2. The bargaining power of 3. The bargaining power of

How intense the competition is in the
marketplace. Rivalry competition is
high when there are just a few
businesses selling a product or
service, when the industry is growing
and when consumers can easily
switch to a competitor’s offering for
little cost.
suppliers
How much power a business’s supplier
has and how much control it has over the
potential to raise its prices, which, in turn,
lowers a business’s profitability. It also
assesses the number of suppliers of raw
materials and other resources that are
available. The fewer supplier there are,
the more power they have.
customers
Examines the power of the consumer,
and their effect on pricing and quality.
Consumers have power when they are
fewer in number but there are plentiful
sellers and it’s easy for consumers to
switch.

4. The threat of new entrants 5. The threat of substitute products or services

How easy or difficult it is for competitors to join the
marketplace. The easier it is for a new competitor to gain entry.
Barriers to entry include absolute cost advantages, access to
inputs, economies of scale, and strong brand identity.
How easy it is for consumers to switch from a business’s product or
service to that of a competitor. It examines the number of
competitors, how their prices and quality compare to the business
being examined, and how much of a profit those competitors are
earning, which would determine if they can lower their costs 39
 4.
BCG GROWTH SHARE
MATRIX

40
BCG Growth Matrix
• Planning tool that uses graphical representations of a company’s products and services to help the company decide what it should keep,
sell, or invest more in.
• Used internally by management to assess the current state of value of a firm's units or product lines.
• The BCG growth-share matrix contains four distinct categories: "dogs," "cash cows," "stars" and “question marks.”

Each of the four quadrants represents a specific combination of relative

market share, and growth:
1.Low Growth, High Share. Companies should milk these “cash cows”
for cash to reinvest.They are doing well with limited growth opportunities.
2.High Growth, High Share. Companies should significantly invest in
these “stars” as they have high future potential. (Monopolies/first-to-
market products)
3.High Growth, Low Share. Companies should invest in or discard
these “question marks” depending on their chances of becoming stars.
These are in a confused state and not clear about decisions on
opportunities.
4.Low Share, Low Growth. Companies should liquidate, divest, or
reposition these “pets/dogs” (weak and difficult)

Stars can eventually become Cash Cows if

they sustain their success until a time when
a high-growth market slows down.
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 5.
ANSOFF MATRIX

42
Ansoff Matrix

▷ A tool that helps plan and evaluate growth initiatives. In particular, the tool
helps stakeholders conceptualize the level of risk associated with different
growth strategies.
▷ The Matrix is used to evaluate the relative attractiveness of growth strategies
that leverage both existing products and markets vs. new ones, as well as
the level of risk associated with each.
▷ The Ansoff Matrix is often used in conjunction with other business and
industry analysis tools, such as the PESTEL, SWOT, and Porter’s 5 Forces
frameworks, to support more robust assessments of drivers of business
growth.

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Ansoff Matrix

1.Market Penetration – The concept of

increasing sales of existing products into
an existing market
2.Market Development – Focuses on
selling existing products into new markets
3.Product Development – Focuses on
introducing new products to
an existing market
4.Diversification – The concept of entering
a new market with altogether new products

44
 Ansoff Matrix
Market Penetration
The least risky, in relative terms, is market penetration.
Sell more of its existing products into markets that they’re
familiar with and where they have existing relationships.
Typical execution strategies include:
•Increasing marketing efforts or streamlining distribution
processes
•Decreasing prices to attract new customers within the
market segment
•Acquiring a competitor in the same market
Product Development
A business that firmly has the ears of a particular market or
target audience may look to expand its share of wallet from
that customer base.
This may be achieved in a variety of ways, including:
•Investing in R&D to develop an altogether new product(s).
•Acquiring the rights to produce and sell another firm’s
product(s).
Market Development
A market development strategy is the next least risky because it
does not require significant investment in R&D or product
development. Rather, it allows a management team to leverage
existing products and take them to a different market.
Approaches include:
•Catering to a different customer segment or target demographic
•Entering a new domestic market (regional expansion)
•Entering a foreign market (international expansion)
Diversification
In relative terms, a diversification strategy is generally the
highest risk endeavor; after all, both product
development and market development are required.
Types of Diversification:
1. Related Diversification
2. Unrelated Diversification
45
 6.
Porter’s Generic Strategies

46
 Porter’s Generic Strategies

Michael Porter in his book “ Competitive Advantage :

Creating and Sustaining Superior Performance “ mentioned
three generic strategies because it can be applied to all
industries and to organizations of all sizes.

Porter called the generic strategies "Cost Leadership"

(no frills), "Differentiation" (creating uniquely desirable
products and services) and "Focus" (offering a specialized
service in a niche market). He then subdivided the Focus
strategy into two parts: "Cost Focus" and "Differentiation
Focus." (refer to the image)

Tip :
The terms "Cost Focus" and "Differentiation Focus" can
be a little confusing, as they could be interpreted as
meaning "a focus on cost" or "a focus on differentiation."
Remember that Cost Focus means emphasizing cost-
minimization within a focused market, and
Differentiation Focus means pursuing strategic
differentiation within a focused market.

47
 Porter’s Generic Strategies (contd…)
The Cost Leadership Strategy
There are two main ways of achieving this within a Cost Leadership strategy:
• Increasing profits by reducing costs, while charging industry-average prices.
• Increasing market share by charging lower prices, while still making a reasonable profit on each sale because you've reduced costs.
Companies that are successful in achieving Cost Leadership usually have:
• Access to the capital needed to invest in technology that will bring costs down.
• Very efficient logistics.
• A low-cost base (labor, materials, facilities), and a way of sustainably cutting costs below those of other competitors.

The Differentiation Strategy

Differentiation involves making your products or services different from and more attractive than those of your competitors. This depends
on the exact nature of the industry and of the products and services themselves, but will typically involve features, functionality, durability,
support, as also brand image that your customers value.

To make a success of a Differentiation strategy, organizations need:

• Good research, development and innovation.
• The ability to deliver high-quality products or services.
• Effective sales and marketing, so that the market understands the benefits offered by the differentiated offerings.
Large organizations pursuing a differentiation strategy need to stay agile with their new product development processes. Otherwise, they
risk attack on several fronts by competitors pursuing Focus Differentiation strategies in different market segments.

Tip :
Remember that Cost Leadership is about minimizing the cost to the organization of delivering products and services. The cost or price paid
by the customer is a separate issue! 48
Case
Specific
Frameworks
49
 How should your framework be?

Characteristics of good frameworks Framework Myths

• MECE: Mutually Exclusive, • There is one perfect framework for every

Collectively Exhaustive case
• Detailed but not lost in the weeds • There is a finite number of possible
• Thorough but not wasteful frameworks that will provide answers to
• Insightful but not presumptive every case
• Tailored as per industry specifics • Frameworks are not that important to the
overall interview

Note :
• By laying out a framework for analysis at the beginning of a case interview, you are not only keeping
yourself organized, but you are providing a visual roadmap for the interviewer to see how you are
thinking and where you are going.
• Some frameworks are better than others to address a particular case. There are always multiple
approaches that can yield the same answer.

50
Framework
Profitability - Overall

51
 Profitability - overview
Background :
Profitability Framework is a special-designed issue tree to solve Profit problems in consulting Case Interview. The framework starts
with a math equation: PROFIT = REVENUE – COST then consequently breaking down each branch (REVENUE and COST) down
into smaller components such as: Price x Quantity or Cost/Unit x Quantity.
Framework used :
Important notes:
• Know about the company -> What
product/service it offer -> Which geography it
caters to.
• Figure out if this is a company specific
problem or an industry wide phenomenon.
• Be cognizant about whether the issue being
dealt with is profits or profitability. Profits are
merely a difference of Revenues and Cost,
while Profitability refers to profit as a
proportion of sales (could be gross margin,
operating margin or net margin)
• Use Value Chain Analysis to clearly layout
all the costs and ask the interviewer where
to focus more.
• Do look at customer journey while analyzing
decrease in quantity sold.
52
Framework
Profitability – Cost Reduction Specific

53
 Profitability – Cost reduction
Background : Approaches :
Approach 1
The aim here is increase profitability by reducing costs.
Divide the cost components into fixed costs,
Framework used : variable costs and other unusual expenses
components

Approach 2
Identify the different cost components in the value
chain and try to figure out the root cause

Important points :
• Clearly lay out the value chain to ensure you do not
miss out on any factor
• Variable costs can be measured as the number of
units produced multiplied by the price.
• Ask probing questions to isolate at each stage of
branching ; use eliminations to move forward
• Quantify and look for trends
• Locate the biggest contributor(s)

54
 Profitability – Cost reduction
Cost headers in the value chain :
The aim here is increase profitability by reducing costs.
Value Chain can be used to understand the different cost components in each portion of the process. Some of the cost headers
under value chain analysis are given below.

R&D : Equipment cost, Human capital cost, cost of finance

Raw material : Cost of RM, contract and bulk deals, quantity used, substitutes
Processing : Machinery, Factory rent, Labour wages, Capacity utilization
Storage and Transportation : Inbound Logistics, Outbound Logistics, Inventory costs
Sales and Distribution : Sales Channels, Sales Force, Training
Marketing : Marketing channels, Strategy
Customer Service : Repairs, Spare parts, Returns

Raw Process- Storage and Customer

R&D Sales Marketing
Material ing Transport Service

Explore cost headers under each branch of the value chain to understand the cost drivers
55
Framework
Market Entry

56
 Market Entry - Overview

Market Entry Cases are those where a client aims to enter a new market(Geography) or a New product in
existing market
A market entry case is hinged on two basic questions:

➢ Is it worthwhile entering the market (economically and strategically)

➢ If yes, what would be the best way to enter the market.

The Initial Questions

Get primitive Always ask about

understanding of company’s objective
company: what it to enter that
does? particular market

57
 Types of Market Entry

Exporting •Exporting is the direct sale of goods and / or services in another country.

•Licensing allows another company in your target country to use your property.
Licensing The property in question is normally intangible – for example, trademarks,
production techniques or patents.

•A continuing relationship in which a franchisor provides a licensed privilege to the

Franchising franchisee to do business

•A joint venture consists of two companies establishing a jointly-owned business.

Joint Venture One of the owners will be a local business (local to the foreign market).

•Foreign direct investment (FDI) is when you directly invest in facilities in a foreign
Foreign Direct Investment market.

•In a wholly owned subsidiary money is invested into another company and is
Wholly Owned Subsidiary bought fully

58
 Framework - New Market Entry
Customer-New
Framework Summary Market
Product Company Industry

Understand what the company ‘s objectives

and expectations are. Does it make business Customer Product Competitor
Needs
sense for them. Does it align with the overall Expectation offerings and Share
firm strategy. Analyse the feasibility of market
entry by considering 4 different buckets. Then
Resource
recommend whether they should enter or not. Available (Capital,
If yes, how should they do it. Segment
Products Technology,
SWOT
Labour)

Strengths
Tips Profiling
Gap between
the above
and Strategic
Barrier to
Entry/Exit
Not every aspect of the framework Assets
mentioned will be applicable to all cases. But
try to cover as much as you can, so that you
get a good idea of the industry and the client Size and Estimate of
Market Share
Growth Market share
current status. It is very important to identify
where the client would stand in the industry
compared to the existing competitors and
Client’s
what measures should be taken to mitigate Target
competitive edge of incumbent. market share
59
 Framework - New Product Entry

New Product
Introduction

Profit and
Initial Establish
Break-Even
Investment Value Chain
Point

Internal Debt Equity Production Distribution Marketing Variable

Units Sold Price/Unit Fixed Cost
Resources Financing Financing Challenges Challenges Challenges Cost/Unit

Framework Summary
A company can either introduce a product in a market where it has
no presence or can extend product line in its current market. Value Chain of FMCG Company
Launching a product in a market with no presence pose not only
operational challenges but viability of product’s success in the market Customer
also needs to be explored. Extending the product line in current Regulatory Goods Distribution
acquisition
Barriers Production Network
market may require looking into cannibalization while doing a 4P’s
feasibility check of product in the market and how the current value
chain can be leveraged in making the product available to its
customers. 60
Framework
Revenue Growth

61
 Revenue Growth Framework
Background :
As per the basic framework, Revenue = Price X Volume.
Profits can be increased by increasing revenue, which in turn is increased by increasing the prices, or volumes, or both. Revenue
growth can be explored by increasing volume of products sold, increasing the price of products sold in existing businesses or by
exploring growth opportunities in new businesses by checking new geographies/markets, diversification, increasing product lines
etc.
Cross Selling
Volume per
customer Loyalty Programs
Revenue Per
Customer Bulk Discounts
Price

New Geographies
Revenue Growth
New Markets New Customer Segments

New Product Launches

# of Customers
Improve Marketing
Existing Markets
Improve Access/Distribution

Keep in mind: Explore Price and Volume and ask the interviewer for preference to explore which one first
Tip: Revenues may be down because you are selling more of the less priced product – Case of Product/Marketing Mix problem. 62
 Revenue Growth Framework
In the New Markets segment, while exploring new Moreover, to recommend the mode of expansion into
geographies, Ansoff matrix can be used to identify new geographies the following chart can be used which
avenues for growth has been discussed earlier

63
Framework
Pricing Strategies

64
 Product Pricing Strategies

Pricing a product begins by asking the right questions (to the interviewer) :
• Get a clear picture of the product and the target customer segment
(Single product or product line? / Commodity or differentiated product? What value the client is adding to the customers? Is the
product luxury or necessity? Is the product patented? Is it imitable easily? )
• Get a clear picture of the firm and their objective with this product
(First time entrant? Does the firm want to grow the market share or top line or bottom line? Does the firm want to push the
competitor out? Does the firm want to play price war? )
• How big is the market?
Does the client have any target segments in mind? Are there any substitutes available?
• What are the different costs involved ?
(R&D, manufacturing, promotion, other costs) Who are the key suppliers to the product?
Now understand which pricing strategy will be the best fit for the product.

The 3 main types of pricing strategies are given here :

Cost Based Pricing : Cost of production / COGS + Margin
Competitive Pricing : Competitor’s pricing +/- Premium/Discount
Value Based Pricing : Customers Willingness to pay(WTP) price or the perceived value

65
 Product Pricing Strategies

Tips :
• Many pricing problems are masked ‘market size’ estimation problems. When the conversation goes in
that direction, ensure you specify that you’d calculate the market size before pricing the product.
• There’s no single price – Always offer a price range. Mention the sensitivity metrics in calculations.
Think about competitive reaction in the market. Topics like bundling and other innovative prices
(discount scheme etc.) will be appreciated.
66
Communicating Results

67
Why is structured communication important? (1/2)
Consider the following very common example:
During the middle of the day, someone asks a question: “By when will you be home?”

Answers:

Reply 1: “Well, I have to send across some urgent deliverables which will take a lot of time, and then I have to go to a
farewell party of one of my colleagues, so I should be home by 11 P.M.”

OR

Reply 2: “I would be home by 11 P.M. as I have to send across some urgent deliverables and post that I have to attend
a farewell party organized for one of my colleagues”

Which one is better? Why?

68
Why is structured communication important? (2/2)
In the previous example, the “Reply 2” is structured as it succinctly states the important information relevant to the
question first supported by the arguments

Hence, the structured communication is important for the following reasons:

Clarifies Information: One of the biggest advantages of integrating structures for communicating with others is
1 that you can better clarify complex details and information. This gives better clarity of purpose

Provides a succinct outline: Structured communicating also gives you the ability to create a framework that
2 supports your purpose for conveying information

Organizes ideas: Helpful in organizing your ideas more effectively. Using outlines and organizing your ideas with
3 lists or notes can help you gather the most important topics for discussions, messages and collaboration

Supports effective decision-making: Communicating the relevant information in a structured manner improves
4 efficiency and effective decision making by maintaining focus on the important topics
69
Frameworks
Pyramid and STAR approach
70
What is pyramid approach?
Pyramid approach is a framework which can be used to make a structured communication of any insight/argument.
The core elements of the approach are:
• Lead with answer first
• Support the answer with key facts/insights at a high level
• Back the key insights with data, analysis and evidence

71
How to structure the findings in the pyramid framework? (1/2)
Below are some of the key guidelines to structure the insights in the pyramid framework:

1 Group relevant information together (MECE) and eliminate irrelevant information

72
How to structure the findings in the pyramid framework? (2/2)
Below are some of the key guidelines to structure the insights in the pyramid framework:

2 Identify the insights. One insight should pertain to one group of supporting data formed in step 1. Additionally,
each insight should be MECE

MECE

3 Combine these insights into a main takeaway. While communicating, communicate the main takeaway first, then
supported by the insights and evidence
73
Pyramid structure – Example 1
Analyze the following information regarding a company and put it in the pyramid framework:
Hourly wages are increasing faster than average. Managerial salaries are increasing faster than average. Increased
attrition is driving up administrative costs. The biggest customer has decreased its orders by 40%. The second biggest
customer decreased its orders by 30%. The number of customers has decreased by 20%

Solution:

The profits of the company is decreasing due to increasing

costs and decreasing sales revenue

Increased labour costs Reduced sales

•Hourly wages are increasing faster than average •The biggest customer has decreased its orders by 40%
•Managerial salaries are increasing faster than •The second biggest customer decreased its orders by
average 30%
•Increased attrition is driving up administrative costs •The number of customers has decreased by 20%

74
Pyramid structure – Example 2
Analyze the following information regarding a company and put it in the pyramid framework:
To increase the revenue by 10% in the next 3 years, a shoe manufacturer is planning to introduce sales offers. In
addition, the company is also looking to expand into new geographies and set up new stores in the existing geographies.
Moreover, with the big investment into R&D, the company is also keen to expand its range of products

Solution:

The shoe manufacturing company can increase its revenue

by 10% through a targeted sales approach

Short-term solutions Long-term solutions

•Introduce sales offers •Expand into new geographies

•Expand its range of products (ensure the presence of •Set up new offices in the existing geographies
a complete product range in the existing stores)

75
What is STAR approach?
The STAR method is a technique of answering behavioral/HR interview questions in a structured manner by
describing a specific situation, task, action, and result of the situation you are discussing.

The STAR format stands for Situation, Task, Action, Result. This approach is similar to the SCQA approach (Situation,
Complication, Question, Answer)

Situation: An event, project or challenge faced

Task: Your responsibilities and assignments for the situation

Action: Steps or procedure taken to relieve or rectify situation

Result: Results of the action taken

76
STAR Approach Example - 1

Question: Tell me about a time when you performed well under enormous pressure.

Answer:

Situation: One time, at my last job, my coworker had a family emergency and needed to miss work for some time, and
their super-important project was left unfinished and without a manager.

Task: My supervisor instructed me to take on the project, and with no leniency on the deadline, I had days to complete a
project that originally should have taken several weeks.

Activity: I requested and was granted a reduction in my weekly goals, allotting me more time to attack the special project.
As far as my weekly goals, I was able to delegate them out evenly to some of my teammates.

Result: With the reduction in my daily goals, I was able to dedicate more time to the special project. This allowed me to
finish it on time and with complete accuracy. My supervisor appreciated my attitude and drive, and I was given several
more projects after that, along with an eventual promotion.

77
STAR Approach Example - 2

Question: Give me an example of when you had to be very strategic in your tasks to meet all of your responsibilities
under a specific deadline

Answer:

Situation: in my previous sales manager role at Company X, I had to suddenly move the team to a new customer
relationship management (CRM) software. The software we were using before unexpectedly changed their pricing model,
which made it too expensive for us.

Task: I had to find new software that met our requirement, by the end of Q3 (when the price increase hit), while making
sure my own sales numbers did not decrease. The new tool also had to be intuitive and easy for our employees to adapt to

Activity: Managing time here was very crucial. I asked our sales associates what the number one problem was with our
current CRM, so I knew what to look for in a new one aside from the price factor. After that, I dedicated 1-2 hours each day
to research, and once I found the new software, migrating our data. I made sure to delete any old contacts, update the
missing information on our current leads, and caught the team up on how to use the new software. All the while, I was still
handling my daily responsibilities as usual, without any decrease in performance

Result: Finally, we managed to complete the transfer 1 week ahead of the deadline. We finished the quarter 12% ahead of
the sales goals, and the team was satisfied with the new CRM.
78
Important Terms and
Formulae

79
 Important terminologies and calculations
Some commonly used terminologies
• SKU: Stock Keeping Unit – Refers to a unique item sold in a store
• Loss Leader: Merchandise sold at a loss to attract new customers or stimulate other profitable sales
• OEM: Original Equipment Manufacturer – A company whose goods are used as components in the product of another company that sells
the finished goods to users
• ODM : Original Design Manufacturer - A company that designs and manufactures a product, as specified, that is eventually rebranded by
another firm for sale
• Oligopoly : A market structure in which the market is dominated by a small number of large sellers and producers
• Monopolistic competition : Monopolistic competition occurs when an industry has many firms offering products that are similar but not
identical. Unlike a monopoly, these firms have little power to curtail supply or raise prices to increase profits
• Price elasticity of demand : A measurement of the change in consumption of a product in relation to a change in its price
• Economies of scale : The phenomenon where the average costs per unit of output decrease with the increase in the scale /magnitude of
the output being produced by a firm
• Experience Curve : An experience curve is an economic term which means that the more a firm produces of a particular good or
service, the more it gains in efficiency. Thus, the cost of production decreases in proportion to the volume of products produced.

Some commonly used calculations

• Inventory Turnover: = (Sales / Inventory)
• Gross Margin : = (Revenues – COGS) / Revenues
• Contribution Margin (CM): = (Sales – Variable Costs)
• CM Rate = (CM) / (Sales)
• Return on Investment (ROI) = (Profits – Cost of Investment) / Cost of Investment
• Breakeven Point / Pay Back Period = (Fixed Costs) / Contribution Margin (CM) 80
Appendix

81
GE McKinsey Matrix

82
 GE McKinsey Matrix

GE-McKinsey nine-box matrix is a strategy tool that offers a systematic approach for the multi-business
corporation to prioritize its investments among its business units. It evaluates business portfolio, provides further
strategic implications and helps to prioritize the investment needed for each business unit (BU).
This framework mainly uses multiple variables to determine the two dimensions - Industry attractiveness &
Competitive strength, which is then plotted along y-axis and x-axis respectively to form a nine-cell matrix.

Industry attractiveness: Competitive strength:

This factor refers to the ease with This measures how strong, in terms
which the business unit will be able of competition, a particular business
to accrue profit in the industry. unit is against its rivals,.
Relevant factors to be considered: Relevant factors to be considered:
Long run growth rate, industry size, Total market share, market share
industry profitability, entry and exit growth compared to others, Brand
barriers, power of suppliers and awareness, customer loyalty and
buyers, trends in prices, change in satisfaction, uniqueness of the
demands etc. product, etc.

aa
 GE McKinsey Matrix
Note: How to use the tool
Make a list of relevant factors for industry attractiveness of a business unit
and assign weights according to their importance. Then rate each factor and
calculate a total score. Total score is the weighted sum of all relevant factors
for a business unit. Do the same for competitive strength for the same
business also. The vertical axis and horizontal axis of this matrix is divided
into three equal parts - High, Medium and Low. Then plot the business unit
on the matrix with the calculated scores.

Strategic implications
Invest / Grow strategy
Businesses that fit into these categories
are the best to invest in since they offer
the biggest potential profits. As these will
be competing in expanding markets, they
will need a lot of capital to retain or
increase their market share. Here,
investments should be provided for R&D,
advertising, acquisitions etc. and to
increase production to meet demand in
future.
Selectivity / Earnings strategy
Invest in these units if you have the
money left over and if you believe
that BUs will generate cash in the
future. The basic rule should be to
invest in companies that serve vast
markets where there are few
dominant players, as this will make
gaining a higher market share much
easier.
Harvest/Divest strategy
First, if the business unit generates
surplus cash, companies should treat
them as ‘cash cows’ and should invest
into these just enough to keep them
operating and collect all the cash
generated.
Second, the business units that only
make losses should be divested or
liquidated.
McKinsey 7S

85
 McKinsey 7S Matrix
What is the Mckinsey 7S matrix ?
The framework contains 7 internal elements of an organization that need to be aligned and work in harmony to achieve organizational
success. The focus of the 7S model lies in the interconnectedness of the elements that are categorized by “Soft Ss” (Strategy, Structure,
Systems) and Hard Ss(Shared values, Style, Staff, Skills) – implying that a domino effect exists when changing one element in order to
maintain an effective balance

Strategy : The organization’s plan for building and maintaining a

competitive advantage over its competitors
Structure : How the departments and teams are structured in the
organization
Systems : The daily activities and procedures that staff use to get the job
done
Shared values : The core values of an organization as shown its corporate
culture and general work ethic. They were called “superordinate goals”
when the model was first developed.
Style : The style of leadership adopted in the organization
Staff : The employees and their general capabilities
Skills : The actual skills and competencies of the organization’s employees

Tip : First identify the areas that are not effectively aligned, then determine the optimal organizational design and decide where and what
changes should be implemented aa
 Made at IIFT Kolkata, ’22-’23

Godspeed!