Case Interview Frameworks Overview

Determine Key Issue(s) Develop Hypotheses Gather Data / Test Hypotheses Refine Answer Develop Options Make Recommendation

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

There is no golden rule, more than one framework may be applicable Use an appropriate framework Do not force a framework Be hypotheses driven Be prepared to revise your hypotheses Mutually Exclusive and Collectively Exhaustive (MECE) Listen for clues from the interviewer Accept direction from the interviewer Display your thinking visually / graphically Be transparent in your analysis Leave time to summarize and make recommendations

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Case Interview Frameworks Some General Frameworks

The Three 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 Market Sizing

Determine The Key Drivers Bottom Up or Top Down?

Make Assumptions

Calculate Use Round Numbers! Common sense check!

Analyze Results Implications?

Increasing Factors

Decreasing Factors

Adjust Answer

Adjust Answer

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Case Interview Frameworks Declining Profits

W at's Driving t e Decline?

Gat er Information

nalyze sing Profit Equation

evenues

arket -

iti

etiti

Hi er ar . sts - Or . Dysf cti - O erti e

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Decreasi . ress re?

Decrease

I crease

Selli Less Profitable Items

dded

apacity?

aw

aterial Prices

Price

Vol

Product

ix

Fixed

osts

Variable

Expenses

osts

nusual Expenses

- Writeoffs - Lawsuits

Case Interview Frameworks Increase Profitability

Revenue

COGS

SG&A

Pri e

Uni Volu e

Dire

Ma erial

Dire

abor

Variable O/H

Pri e Sen i ivi y - la i i y

i ing Marke - Pro o ion - Pla e

S ale ono ie /Di e ono ie - Supply Con rain

Repla e w/ a hine - Union?

Co A g - Allo a ion Drivers - Does pri ing re le Cost

Co pe i ive nviron - Sub i u e -

New Marke - Geographi ono ie o S ope

nven ory Mg - Carrying Co - 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?

arket Demand

Investment vs. Improvement

Industry Capacity

arket Trends

Improve Productivity

Add Capacity

Competitors Plans

T reats

Cyclical Seasonal

Bottlenecks

Add s ifts

Economy Global Competition Consumer tastes Substitutes

Design for manuf.

Acquire Outsource

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Case Interview Frameworks Customer Turnover

What Has Changed in the Following Environments?

Company

Customer

Competition

Regulatory

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

Cust r hat do they want? - How do they choose? -

Susbsitutes

Disposable income

Distribution channel

Demographic changes New customers?

Mature market?

Bundled product? Normal good?

romotion Intangible Finances Customer

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

"

Values Tastes

Price Sensitivity

"



Competitor here are we positioned? here is the competition?

Company - How do we add value?

Purchasing Habits

roduct

Resources to respond?

Business relationships

lace
Cost structure rice Distributor

Tangible

Vendor

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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?

Many

Few

Are there barriers to entry?

Is market growing? Promotion Push or Pull? Cost of launch? ill current promotions help?

Can we eat the young?

No Can we erect some?

Place Is distribution aligned with customer? Are we e perienced in this channel?

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0 (

hat wil be the strategy? ow cost or Differentiated?

Yes Can we beat them?

'

Price Have we e plored sensitivity? Can we make a profit at this price?

ill we be first movers?

Operations D0 we have capacity? Supply network?

Any precious resource that we own? (Ricardian rents)

Marketing ill we cannibalize e isting products? Is this a complement bundled good Does it build on resources?

Product Have we done homework? hat does the segment want? Proliferation of products already?

Yes

No

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

& %

Case Interview Frameworks International Expansion

Internal External Quantitative

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

Distribution system - Transportation infrastructure - Different channels Political Clim ate - Instability

Local arket - Size - Com petition

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Corporate Values - Bribery W orker's conditions / child labor

Seasonality - W eather

Is organization consistent with overseas 'autonomy'

Econom y

Alliance with local firm? - Joint venture/distributor

ethods of Conducting Business - Introductions - Governm ent contacts

Cash Flows

Educational Differences

Amount

Exchange

ates

Timing - Startup / disposition - Operating Discount ate

Doesit match our growth strategy? - OE OI

Cultural Differences of Custom ers - Tastes / product preferences - Values / gender roles

O I / Hurdle

ate

Case Interview Frameworks Investment Decision

Investment Decision

NPV Analysis

Other Factors

Size arket Potential - Outflows - Working Capital

Timing - Opportunity Cost

isk Free ate - Inflation - isk Adjust

Useful Life

Cash Flows

Discount

ate

Strategic Fit

Synergies

Environmental

Political

Competitors

- issing Links of Value Chain

- Seasonality - Volatility - Inflation Demand Cycle

Stability Regulation

- Current Supply Potential Demand

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Case Interview Frameworks Company Acquisition

Understand Purpose Diversification? Gain arket Share? Geographic Expansion?

Analyze Opportunity

Internal Factors

External Factors

Strategic Objective

Strengths

Weaknesses

Industry Attractiveness

Identify Acquisition Candidates

Resources

Acquisition Fit Porter's Five Forces Three C's Soft Issues - Culture/Fit - anagement Hard Issues - Price - Balance Sheet

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Case Interview Frameworks Hostile Takeover Defense

Two ptions Both Designed to Raise the Value of the Company

Self-Help

hite Knight

Are e Highly evered? (Relative to the Industry)

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

Yes

No

Has Financial Strength Strategic Compatability

Do

e Have Cash?

Issue Debt, Buy Back Stock Cultural Fit

Yes Then Buy Back Stock to Raise Stock Price

No Can e Release ood News to Raise Stock Price?

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