GlobThink

Dear Readers of Globthink,

I would like to share my personalized MBA Case Framework for consulting interviews. My framework is far from perfect. I will try to improve it as I am doing more cases. You can use my framework if you want but I recommend you building your own framewok. You will learn a lot doing that.

My Framework is based on building blocks.

1. Most common case scenarios (M&A, Profitability, New Product, New Market) are structured using high level building blocks (“buckets”).
2. Building blocks are shared among different scenarios
3. Building blocks are classified in groups
4. Some building are composed of smaller building blocks

I have 13 scenarios and around 40 building blocks.

First of all, remember some trends about the current economy

• USD⇓ slowly; Euro ⇑; Yen/ Euro =; interest rates⇓ but not for long; Gas ⇑

SCENARIOS

NEW MARKET

1. Market Strategic Fit
2. Market Attractiveness
3. Financials,
4. Implementation

NEW PRODUCT

1. Product Strategic Fit
2. Product
3. Market Attractiveness
4. Financials
5. Market / Product Implementation

INDUSTRY ANALYSIS

1. Market Attractiveness
2. Supply Chain (Suppliers/ Distributors)
3. Collaborators
4. Future Market

MERGERS & ACQUISITIONS

1. M&A Rational (before drawing the framework)
2. M&A Strategic Fit
3. Market Attractiveness
1. Company Attractiveness
4. Financials
5. M&A Implementation:
6. Exit Strategies

PRICING

1. Product
2. Market / Company Economics
3. Pricing Schema
4. Financials
5. Supply & demand
1. Implementation

GROWTH STRATEGY

1. Market Attractiveness
2. Growth Options
3. Product / Market Strategic Fit
4. Financials
5. Market / Product / M&A Implementation & Risks

START A NEW BUSINESS

1. Market Attractiveness
2. Company Attractiveness
3. Financials

RESPONSE TO COMPETITOR / EXTERNAL

1. External Change → Costs & Revenues
2. Competition & Substitutes
3. Customer Reaction
4. Competitive Response
5. Market / Product Implementation

PROFITABILITY

1. External Change → Costs & Revenues
2. Competition & Substitutes
3. Customers
4. Company Operations (compare to competitors)
5. Options to Increase Sales & reduce costs
6. Financials
7. Profitability Implementation

TURNAROUND

1. PROFITABILITY FRAMEWORK
2. Strategy: short-term & long-term goals
3. Organization
4. Financials
5. Turnaround Implementation

INVEST IN NEW BUSINESS OR EQUIPMENT, CAPACITY EXPANSION

1. Capacity Investment Rational
2. Industry Analysis
3. Capacity Investment Impact
4. Capacity Investment Factors
5. Capacity Investment Implementation:
6. Financials

STREAMLINE A PROCESS

1. Processes
2. Customer Reaction
3. Process Changes
4. Alternative Comparison
5. Competitive advantage of changed process
6. Financials
7. Measurement

STREAMLINE AN ORGANIZATION/PROCESS

1. Processes
2. Customer Reaction
3. Organizational Changes
4. Alternative Comparison
5. Competitive advantage of changed process / organization
6. Financials
7. Measurement

BUILDING BLOCKS

RATIONALS

M&A RATIONAL
1. Increase Revenue: (boost brand, increase share, channel expansion)
2. Reduce Cost: cost synergies (economies of scale, economies of scope, learning curve)
3. Other: Diversify Holding, Pre-empt Competition, Shareholder Value

CAPACITY INVESTMENT RATIONAL
1. Capacity utilization
2. Demand increase

STRATEGIC FITS

MARKET STRATEGIC FIT
1. Objectives
2. Competencies
3. Brand fit
4. Opportunity Cost
5. Organizational Impact

PRODUCT STRATEGIC FIT
1. Fit in product line,
2. Cannibalization,
3. Increase revenue,
4. Trade up-down

M&A STRATEGIC FIT
1. Investment strategy & style
2. Size
3. Number of investments
4. Hurdle rate
5. Expertise in target industry

ATTRACTIVENESS & TRENDS

MARKET ATTRACTIVENESS
1. Economics (compare to us)
2. External Trends
3. Market Drivers
4. Customers Trends
5. Competition & Substitutes Trends (compare to us):
6. Entry/Exit Barriers

COMPANY ATTRACTIVENESS
1. Company Economics
2. Synergies: reduction, costs, technology, capacity, complementarities, network effects
3. Management: who?, strengths, worked together before? Advisory board?, key employees
4. Product
5. Brand
6. Supply Chain

MARKET / COMPANY ECONOMICS (COMPARE TO US)
1. Size
2. Growth
3. Stage,
4. Profitability (margins, volumes, shares),
5. Mono-oligo-comp

EXTERNAL TRENDS
1. Technology
2. Segments growth
3. Regulation
4. Costs

MARKET DRIVERS
1. Consumer insight
2. Technology
3. Brand

CUSTOMERS TRENDS
1. Segments
2. Channels (sell and advertise)
3. Preferences
4. Loyalty
5. Geographies

COMPETITION & SUBSTITUTES TRENDS (COMPARE TO US)
1. Players & their Targets
2. Price / Volume=Share / Quality,
3. Products (advantages & disadvantages),
4. Marketing (brand)
5. Strategy (M&A)
6. Technology
7. Competitors Response
8. Impact on us (share, revenues, growth)

ENTRY/EXIT BARRIERS
1. Non-customer
i. Capital
ii. Scale,
iii. Learning Curve
iv. Access to Suppliers
v. Legal
vi. Geographical
2. Customer
i. Customers’ switching costs
ii. Brand awareness
iii. Access to channels
iv. Network effects

OPERATIONS

PRODUCT
1. Product Mix (Price, Volume, Contribution)
2. Advantages & Disadvantages
3. Substitutes: Is it a must-have, advantages of substitutes
4. Quality
5. Augmented Product
6. Costs: R&D cost, Educate consumer, Advertising, growth/decrease
7. Patented, Proprietary

COMPANY OPERATIONS (COMPARE TO COMPETITORS)
1. Revenues Streams: Shares, Trends
2. Sales Force: incentives, presentation, training
3. Supply Chain Cost Change (Price, Volume, Quality, Delay): Suppliers / Distributors / Wholesalers / Outsourcing
4. Internal Cost Change: Rent, Labor, Marketing, Labor, Equipment, Maintenance, General, Lobbying, R&D
5. Product: Product Mix (Price, Volume, Contribution)
6. Variable / Fixed: Capacity, Economies of Scale, of Scope

SUPPLY CHAIN
1. Secured Suppliers
2. Secured Channels
3. Number – Availability
4. Their Markets

PRICING SCHEMA
1. Competitive Analysis: Prices in comparison to us
2. Cost Plus: COGS, Margin
3. Price-Taker: willingness to pay, substitutes
4. Economic Value Analysis: Reference Value, Differentiation Value
5. Non-linear pricing: Two part-pricing, Bundling

SUPPLY & DEMAND
1. Short-run outcomes: customer response,
2. Long run outcomes
3. Price affect market equilibrium

FINANCIALS

FINANCIALS
1. Attainable Share & Revenues
2. Price (profitable): only for M&A
3. Funding: Debt/Equity
4. Best Allocation
5. NPV – Break Even: Initial Investment, Ongoing Direct Cost, Ongoing Fixed Cost
6. Liquidity
7. Financial Risks

IMPACTS AND REACTIONS

EXTERNAL CHANGE → COSTS & REVENUES
1. Economy: interests
2. Legislation
3. People: Strikes, Public Opinion
4. Technology
5. Supply Chain

CUSTOMER REACTION
1. Switchers: number, why, speed, getting them back
2. Non-Switchers: number, why

COMPETITIVE RESPONSE
1. Copy Competitor
2. GROWTH OPTIONS
3. EXIT STRATEGIES

CAPACITY INVESTMENT IMPACT
1. Prices: Supply ⇑ Prices ⇓
2. Competitive Reaction
3. Opportunity cost/ economic rents

OPTIONS & COMPARISONS

GROWTH OPTIONS
1. Increased Penetration (Existing P in Existing M)
2. Product Development (New P in Existing M)
3. New Market Entry (Existing P in New M)
4. Diversification (New P in New M)
5. Cost Reduction

OPTIONS TO INCREASE SALES
1. Increase / Reduce Prices
2. Seasonal Balance
3. Improve / Increase Sales Force, Customer Service, Paying Modalities: V⇑, V/sales⇑
4. Expand to new areas: V⇑
5. Expand to niche markets
6. Increase Marketing: V⇑

OPTIONS TO REDUCE COSTS
1. Technology
2. Capacity
3. Outsource
4. Change process

ALTERNATIVE COMPARISON
1. Revenues/Costs
2. Advantages/Disadvantages
3. Choose
4. Resolve disadvantages of the solution

CAPACITY INVESTMENT FACTORS
1. PPE & Depreciation:
2. Utilization rate
3. Proximity to suppliers, distributors, transportation requirements
4. Timeline

ORGANIZATIONAL

ORGANIZATION
1. Age, Size
2. Costs / Quality / Results
3. Problems: Overburden, Bad Management
4. Most value-added parts
5. Impact in other processes / organization

PROCESSES
1. Age
2. Cost/ Quality/Results/ Delay
3. Most value added part of process
4. Impact in other processes / organizations
5. Process in competitors, standards

IMPLEMENATIONS

PROFITABILITY IMPLEMENTATION
1. Timeline
2. Other Risks

MARKET / PRODUCT IMPLEMENTATION
1. Acquisition, Merge, Joint Venture
2. Organic: Increase Capacity, Increase Channels, Invest in Marketing
3. Organization: people (Hire competitor’s management) processes, systems
4. Geographical challenges
5. Timeline
6. Risks

M&A IMPLEMENTATION
1. Organizational integration: corporate culture
2. Vertical Integration: Coordination costs, costs of using the market
3. Timeline
4. Other Risks

PRICING IMPLEMENTATION
5. Roll out
6. Communicate new price (salesmen, advertising)

CAPACITY INVESTMENT IMPLEMENTATION
1. Expand Existing Facility
2. Build New Facility
3. Lease
4. Outsource
5. Acquire

TURNAROUND IMPLEMENTATION
7. Business plan: prioritize goals
8. Reassure clients, suppliers, distributors
9. ORGANIZATIONAL CHANGES

ORGANIZATION CHANGES
1. Relocate people
2. Simplify structure (role changes, direct reports, people’s response)
3. Build skills
4. Compensations & incentives

EXIT STRATEGIES
1. Keep it
2. Sell it in parts
3. Restructure it & Sell it
4. Close down