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Elements of the ecosystem could be both specific and general

Demographic and cultural forces Customers International forces Distributors Political forces




Suppliers Environmental forces

Competitors Technological forces

Economic forces

Porters 5 forces framework: What drives competition in the industry

Economies of scale Proprietary product differences Switching cost Capital requirements Access to distribution Industry growth Cost versus value added Product differentiation Brand identity Concentration and balance

Differentiation of inputs Presence of substitute inputs Supplier concentration Importance of volume to supplier

Buyer versus firm concentration Information availability to buyer Brand loyalty Price differences Product differences

Relative price/performance of substitutes Switching costs Buyer propensity to substitute

Case Interview Frameworks Some General Frameworks

The Three Cs The Four Ps Porters Five Forces (+govt.) Supply & Demand The Profit Equation

Internal - External
NPV Analysis

Dont be afraid to create your own framework, as long as it is logical, appropriate and transparent to the interviewer.

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Case Interview Frameworks Declining Profits

What's Driving the Decline?

Gather Information

Analyze Using Profit Equation





Product Mix

Fixed Costs

Variable Costs

Unusual Expenses

Decreasing Comp. pressure?



Selling Less Profitable Items

- Added Capacity?

- Raw Material Prices

- Writeoffs - Lawsuits

- Market Conditions - Competition

Higher Marg. Costs - Org. Dysfunction - Overtime

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Case Interview Frameworks Increase Profitability





Unit Volume

Direct Material

Direct Labor

Variable O/H

Price Sensitivity - Elasticity

Existing Market - Promotion - Place

Scale Economies /Diseconomies - Supply Constraints

Replace w/machines - Union?

Cost Acctg. - Allocation Drivers - Does pricing reflect Cost

Competitive Environ. - Substitutes

New Markets - Geographic - Economies of Scope

Inventory Mgmt. - Carrying Costs - Shrinkage

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

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Case Interview Frameworks Increase Capacity?

Should We Increase Capacity?

Market Demand

Investment vs. Improvement

Industry Capacity

Market Trends

Improve Productivity

Add Capacity

Competitors Plans


Cyclical / Seasonal


Add shifts

Economy Global Competition Consumer tastes


Design for manuf.

Acquire Outsource

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Case Interview Frameworks Customer Turnover

What Has Changed in the Following Environments?





Product Is quality sagging?

Tastes changing?

Are low cost competitors stealing from us?

Do new tax incentives exist?

Price Have sensitivities changed? Overpriced versus our competition? Place Is our distribution getting squeezed out? Are Customers Changing Channels? Promotion Are we spending? Push vs. pull? Has public image changed?

Disposable income?

Are diffentiated competitors stealing from us?

Any new regulations restricting the use of our product and favoring substitues?

Demographics of our target?

Are competitors integrating into distribution and shutting us out? Are they offering our customers special incentives to switch? (particularly with substitutes)

Do new substitutes exist?

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Case Interview Frameworks Competitive Response

Customer - What do they want? - How do they choose? Competitor - Where are we positioned? - Where is the competition? Company - How do we add value?


Price Sensitivity

Purchasing Habits

Product Place

Resources to respond?

Business relationships

Susbsitutes Demographic changes New customers?

Disposable income Mature market?

Distribution channel Price Bundled product? Promotion Normal good?

Cost structure Tangible Intangible Finances

Distributor Vendor Customer

Given the above, is it worth making a competitive response? How will the competition react? Applying game theory or PARTS analysis may help.
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Case Interview Frameworks New Product Introduction?

Customer Does product met a need?

Competition Is there any?

Company Can we do it?

Product Have we done homework? What does the segment want? Proliferation of products already? Price Have we explored sensitivity? Can we make a profit at this price?



Finance Are we able to finance the launch? Should we buy an existing producer?



Are there barriers to entry?

Will we be first movers?

Operations D0 we have capacity? Supply network?

Is market growing? Promotion Push or Pull? Cost of launch? Will current promotions help? Place Is distribution aligned with customer? Are we experienced in this channel?

What wil be the strategy? Low cost or Differentiated?

Yes Can we beat them?

Any precious resource that we own? (Ricardian rents)

Can we eat the young?

No Can we erect some?

Marketing Will we cannibalize existing products? Is this a complement / bundled good Does it build on resources?

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Case Interview Frameworks International Expansion

Internal External Quantitative Doesit match our growth strategy? - ROE/ROI Cultural Differences of Customers - Tastes / product preferences - Values / gender roles Methods of Conducting Business - Introductions - Government contacts Educational Differences ROI / Hurdle Rate

Alliance with local firm? - Joint venture/distributor

Cash Flows

Can our resources succeed overseas? - Flexible enough to adapt?


Is organization consistent with overseas 'autonomy'

Economy & Exchange Rates

Timing - Startup / disposition - Operating Discount Rate

Corporate Values - Bribery Worker's conditions / child labor

Seasonality - Weather

Distribution system - Transportation infrastructure - Different channels Political Climate - Instability

Local Market - Size - Competition

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Case Interview Frameworks Investment Decision

Investment Decision

NPV Analysis

Other Factors

Useful Life

Cash Flows

Discount Rate

Strategic Fit





Timing - Opportunity Cost

- Risk Free Rate - Inflation - Risk Adjust

- Missing Links of Value Chain

- Seasonality - Volatility - Inflation Demand Cycle

Stability Regulation

- Current Supply Potential Demand

Size - Market Potential - Outflows - Working Capital

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Case Interview Frameworks Company Acquisition

Understand Purpose Diversification? Gain Market Share? Geographic Expansion?

Analyze Opportunity

Internal Factors

External Factors

Strategic Objective

Strengths & Weaknesses

Industry Attractiveness

Identify Acquisition Candidates


Acquisition Fit Porter's Five Forces Three C's Soft Issues - Culture/Fit - Management Hard Issues - Price - Balance Sheet
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Case Interview Frameworks Hostile Takeover Defense

Two Options Both Designed to Raise the Value of the Company


W hite Knight

Are W e Highly Levered? (Relative to the Industry)

Classic M&A Is there a Firm That...



Has Financial Strength Strategic Compatability

Do We Have Cash?

Issue Debt, Buy Back Stock

Cultural Fit

Yes Then Buy Back Stock to Raise Stock Price

No Can We Release Good News to Raise Stock Price?

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