2003年商学院案例集

WHARTONCONSULTINGCLUB

InterviewStudyGuide

Revised2003

TABLEOFCONTENTS

TOC\o"1-1"\h\z\u

Introduction 3

WhartonMBAConsultingClubInformation 4

HowtoUsethisGuide 5

TheFitInterview 6

CaseInterviews:TheBigPicture 9

SolvingtheCase:BusinessCases 11

Frameworks 13

SolvingtheCase:EstimationCases 17

HowtoGiveaGoodCase 19

PracticeCases 20

INTRODUCTION

WelcometoWharton’srevisedCaseInterviewStudyGuide!TheGuidewascompiledbyyourconsultingclubmemberstohelpyouprepareforthefirststeptowardsyourdreamconsultingjob–theinterview.Typically,candidatesencounterbothafitinterviewaswellasacaseinterview.Thelattercomprisesanexampleofthetypeofproblemsthatconsultantsgenerallyface.Itisimportanttorememberthatthereisno“right”answerforcaseinterviews.Instead,thesuccessfulintervieweeisonethatisabletothinkthroughtheissues,developastructuredresponseandconfidentlycommunicatethesetotheinterviewer.ThisGuideismeanttohelpyouinthatprocess,andweencourageyoutopracticeasmanysamplecasesaspossible,fromthissourceaswellasothers,inordertotacklethecasequestionsyouwillencounter.

ThisGuideoutlinesadescriptionofthetypesofcasesthatyouwilllikelyencounter.Italsoprovidesframeworksthatwillhelpyouconstructastructuredresponse.ThefinalsectionoftheGuideincludesanumberofsamplecasesthatweregiventofirstandsecondyearsduringthepastrecruitingseason.Theyrepresentthelatestarsenalofcasesinterviewershaveusedonstudents.Youshouldviewthemasbeingrepresentativeofthetypeofcasesyouwillgetduringyourinterviews.Keepinmind,however,thatinterviewersdrawontheiractualconsultingexperiencetocreatetheirinterviewcases,andthattheinterviewerwillmodifythecasebasedonyourresponses.Thus,eachcaseisdifferentforeachstudent.

OursincerethanksgotoNinaBartonandtheclassof2003consultingclubmembersforinitiatingthisGuide.Wealsothankthememberswhocontributedtheircasesforthebenefitofallcandidatesthisyear.

PleaseprovideyoursuggestionsonthisGuidesothatwemaycontinuetoimproveitforcomingyears.AsectiononWebCafewillbedevotedtofeedback,sopleasegotothewebsitetosubmityourcomments.

Goodluckonyourinterviews!

WhartonMBAConsultingClubOfficers

WHARTONMBACONSULTINGCLUBINFORMATION

TolearnmoreabouttheWhartonMBAConsultingClubandouractivities,pleasevisitourwebsite:

/~consultg/.

YoucanalsocontactoneoftheWhartonMBAConsultingClubOfficers:

President:NeelBhatia

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ExecutiveVicePresident:CreightonSchenkel

creighton.schenkel.wg04@

ExecutiveVicePresident:RyanKoch

ryan

koch.wg04@

VicePresidentofSocial/Treasurer:AntonHanebrink

anton.hanebrink.wg04@

VicePresidentofEmployerRelations:RoshanieAdhin

roshanie.adhin.wg04@

VicePresidentofEvents:AngelaGe

angela.ge.wg04@

VicePresidentofEvents:TracyTeoh

tracy.teoh.wg04@

VicePresidentofIntellectualProperty:ShailaKhan

shaila

khan.wg04@

VicePresidentofInternalStrategy:JasonPeters

jason.peters.wg04@

VicePresidentofMemberEducation:ChristinaHsu

christina.hsu.wg04@

VicePresidentofInternationalConsulting:HartantoTjitra

hartanto.tjitra.wg04@

HOWTOUSETHISGUIDE

Beforeyoubegintopracticecaseinterviews,getfamiliarwiththecaseinterviewformat.SpendsometimereviewingtheSolvingtheCasesectionsofthisguidewhichdescribehowtoapproacheachtypeofcase.Thenreadthroughsomeofthepracticecasesandsolutionsinordertogetafeelingforwhatthecasesarelike.Trytogetasenseofhowtheauthorofthesolutionframedthecase,askedquestions,andproceededwithhisorheranalysis.Butdon’tthinkthatthesolutionsprovidedaretheonlysolutionsoreventhebestsolutions.Theyjustprovideanillustrationofhowonepersonapproachedthecase.

Whenyou’rereadytopracticeinterviews,itmaybebesttostartwithanotherfirst-yearstudent.Taketurnsplayingtherolesofinterviewerandrecruit.Theinterviewershouldreadthequestionandsolutiontohim/herselfinfullbeforestartingtheinterview.Bydoingthis,theinterviewerwillbebetterabletoanswertherecruit’squestions.Theinterviewershouldalsobepreparedtomakeupfactsandaskadditionalquestionsasthecaseproceeds.Anyfactsarefinejustaslongastheyareconsistentwiththeotherfactsthathavebeenrevealedthusfar.Whenthecaseisover,theinterviewershouldgivetheintervieweecandidfeedback.Discusswhatwentwellandwhatdidn’t.Theinterviewershouldshareanyimpressionss/hemayhavehad,suchaswhentherecruitwasrepeatinghim/herself,notlisteningcloselytohints,etc.Itmaybehelpfultotapetheinterviewsonvideosotherecruitcanwatchhis/herbodylanguageandreactionstotheinterviewer’scommentsandquestions.

Youshouldalsoconsiderpracticingcreatingcasesusingyourownworkexperience.Interviewershavebeenknowntoaskyoutosolveacurrentbusinessproblembasedonyourworkexperienceasoneofyourcasequestions,especiallyinsecondandthirdroundinterviews.

THEFITINTERVIEW

Youmayfeelpreparedtotacklethecasesinyourinterview,buthaveyoupreparedforthepersonalinterviewaswell?Toooften,candidatesleavethattochance;however,itisanintegralpartoftheinterviewprocess,anditistoyouradvantagetospendtimepreparingforthefitquestions.

Thepersonalinterviewmaybeconductedasaseparateprocess,whichusuallylastsfrom30to45minutes,oritmaybepartofthefewminutestheinterviewerspendschattingwithyoubeforethecase.Eitherway,thefitinterviewismeanttodetermineyourinterestinaconsultingcareerandthefirm,aswellastogaugehowwellyouwouldfitinwiththefirm’sculture.Whilethesearenotmalleablethings,therearewaystoensurethatyougetthosepositiveaspectsofyourselfacrossthatyouwanttostresstothefirm.

Similartocaseinterviews,theonlywaytosucceedinthefitinterviewistopractice.Asamplelistofcommonfitinterviewquestionsisprovidedattheendofthissectionforthisreason.Additionalresourcesthatcanhelpyoutacklethispartoftheinterviewprocessarealsoprovidedbelow:

“CaseinPoint:CompleteCaseInterviewPreparation2ndEdition”byMarcP.Cosentino

“PowerInterviews:Job-WinningTacticsfromFortune500Recruiters,RevisedandExpandedEdition”byNeilM.Yeager(Author),LeeHough(Author)

“201BestQuestionsToAskOnYourInterview”byJohnKador

Thedayofyourinterviewcanseemstressful,butitdoesn’thavetobe.Practicingandbeingpreparedwithknowledgeofthefirmaswellasyourownstorywillhelptakeawaysomeofthisstress.Keepthefollowinginmindwhenpreparing:

Knowyourresume.Makesurethatyou’reabletotalkaboutthedecisionsyoumadethatledyoutoWharton,andthereasonswhy.Showhowyourgoalshavedevelopedtoleadyoutothefirmwithwhichyouareinterviewing.

Knowwhyyouwanttoworkwiththefirm.Doyourhomework.Speakknowledgeablyaboutspecificareasofthefirm’spracticeinwhichyouareinterested.Checkrecentarticlesandreportsaboutthecompanytoaskpertinentquestions.

Rememberthefollowingtipsoninterviewdayaswell:

Don’tbelate!

Payattentiontoyourpersonalappearance.

Showconfidence,interestandenthusiasm.

Donotemphasizemoneyintheinterview.

Avoidspeakingnegativelyaboutpastemployers.

Makeeyecontactwhenconversing.

Askpertinentquestionsaboutthejob.

Befirminyourresponsestoquestions.

Avoidthe“knowitallcomplex."

Payattentiontovoicedictionandgrammar;expressyourselfclearly.

SampleFitInterviewQuestions:

Personal

Tellmeaboutyourself.

Walkmethroughyourresume.

Whatareyoumostproudofonyourresume?

Wheredoyouseeyourselfin5/10years?

Describeasituationinwhichyouhadtoconvinceothersinyourpreviousjob.

Talkaboutaprojectfromyourresumeinwhichyouhadtosolveaproblem.

Whatwouldothermembersofyourlearningteamsayaboutyou?

Explaintomewhyyoumadeyourpreviousjobchanges.

Whatarethethreemostimportanteventsinyourlife?

Givemethreewordstodescribeyourself.

Ifyoucoulddo‘it’alloveragain,whatwouldyoudodifferently?

Inwhatkindofworkenvironmentdoyoudoyourbestwork?

Whataretheattributesofanidealjobforyou?

Didyougetanofferfromthefirmyouworkedforthissummer?

Doyouhaveotheroffers,includingonefromyoursummerjob? Whywouldyoutakeourofferoveroneoftheothers?

Whatdoyouenjoydoingoutsideofworkinyourfreetime?

Ifyouhadsixmonthsaheadwithnoobligationsandnofinancialconstraints,whatwouldyoudo?

Ifyoucouldtradeplaceswithsomeoneforaweek,whowoulditbe?

Whatisyourfavoritebook/movie/song/paintingorauthor/actor/singer/artist?

Whichmagazines/newspapersdoyoureadregularly?

Whichbookshaveyoureadrecently?

Management/LeadershipStyle

Defineleadership.

Whatisyourmanagementphilosophyandleadershipstyle?

Givemeanexampleofaleadershiproleyouhaveheldwhennoteverythingwentasplanned.

Tellmeaboutatimewhenyousuccessfullyresolvedaconflict.

Whataresomekeylessonsyouhavelearnedaboutmotivatingpeople?

Givemeanexampleofatimeyouwereabletochangeamanager’sopinion.

Whyareyouagoodmanager?

Tellmeaboutyourpastexperienceworkinginteams?

Strengths/WeaknessesandSkills

Whatisyourgreatestweakness?

Giveanexampleofsomethingyouhavedonethatshowsinitiative.

Whatcanyoudoforusthatsomeoneelsecannotdo?

Nameonethingyoulearnedfromyourpreviousexperience/internship.

Givemeanexampleofoneofyoursuccesses.

Givemeanexampleofoneofyourfailures.

Describetheaccomplishmentofwhichyouaremostproud.

Whathasbeenyourgreatestchallenge?

Whatstrengthsandattributeswouldyoubringtothisposition?

Tellmehowyouovercameanespeciallydifficultchallenge?

Whyshouldwehireyou?

Areyoucreative? Givemeanexample.

Education

WhydidyoudecidetogetanMBA? WhyWharton?

Whatmadeyoudecidetomajorin ?

WhathaveyoulearnedatWhartonthatwillhelpyouonthisjob?

Whatextra-curricularschoolactivitiesareyouinvolvedin? Doyouholdanyleadershippositions?

Whatelectiveshaveyoutaken? Whichdidyouenjoythemost?

Whatisyourfavoriteclass?

Describethecoursethathashadthegreatestimpactonyourthinking.

Job/Company/Industry

Discusswhatattractsyoutoacareerinconsulting.

Whatdoyoupredictisgoingtohappeninthisindustryinthenext5years?

Whatpartsofthejobdoyouthinkyouwouldfindleastsatisfying?

Howwillconsultinghelpyougetwhereyouwanttobeintenyears?

Whatdoyoulikeaboutourcompany? Whatdifferentiatesitfromotherfirmsforyou?

Whatdoyoubelievearethekeyissuesandproblemsinourindustrytoday?

Whatdoyouthinkittakestobesuccessfulinthisfield?

Whatotherjobs/fieldsareyouconsidering?

Whatindustrypublicationsdoyounormallyread?

Locations

Doyouhaveageographicalpreference?

Whydoyouwanttorelocateto ?

Areyouwillingtorelocateeverytwoyearsorso?

Howdoyoufeelabouttravel?

Wrap-Up

Whatwouldyoulikemetoknowaboutyouthatisnotonyourresume?

Whatwouldyoulikeyourlastingimpressiontobe?

Doyouhaveanyquestionsyou’dliketoask?

CASEINTERVIEWS:THEBIGPICTURE

WhatConsultingFirmsAreLookingFor

Consultingfirmsusecaseinterviewstogaugehowwellacandidatewillperformonthejob.Asyoupracticecases,keepinmindwhatskillsandattributestherecruitersarelookingforandtakeituponyourselftodemonstratethem.Thefollowingarethreequestionsmostrecruitersareprobablytryingtoanswerwheninterviewingacandidate:

Canthecandidatesolveproblemsforourclients?

Usethecaseinterviewtodemonstrateyouranalyticalskills,logicalreasoning,businesssavvy,andcreativity.Showtheinterviewerthatyoucanlistencloselytothequestionbeingaskedofyou,breaktheproblemdownintocomponents,formulatemeaningfulquestions,proceedlogicallythroughaninvestigation,anddrawreasonableconclusions.

CanIputthiscandidateinfrontofaclient?

Toooften,candidatesareonlyconcernedwithdemonstratingproblem-solvingskillsandforgetthatconsultingisaserviceindustrywhichvaluescommunicationandpresentationskills.Usetheinterviewtodemonstratecomposure,maturity,andconfidence.Showthatyouaretactfulandfriendlyandthatyoucanpresentyourthoughtsusingclear,conciselanguage.

WillIwanttoworkwiththiscandidate?

Candidatesshouldremembertobethemselvessotheinterviewercangettoknowthem.The“airportrule,”oftenquotedbyconsultantsduringinterviews,referstothetestofwhethertheybelieveacandidateissomeonetheywouldnotmindbeingstuckinanairportwithforafewhoursduringalayover.Whileitmaysoundhardtobelieveatthispoint,caseinterviewscanandshouldbeafunexperience.Successfulcandidateswillshowtheinterviewerthattheyareinterestedinthecaseandempathetictotheclient,andthattheyhavealotofenthusiasmandenergy.

Oneadditionalnote:Don’tforgetthatacaseinterviewisfirstandforemostaninterview.Everythingyou’veeverlearnedaboutinterviewingstillapplies.Trytoconnectwiththerecruiterandestablishapositiverapport.Becandid,pleasant,andmaintaineyecontact.Regardlessofhowuncertainyouareofaresponse,trytoremaincalmandconfidentaswell.

TypesofCaseInterviews

Therearetwomajortypesofcases:businesscasesandestimationcases.Byfarthemostpopulararebusinesscases,inwhichtheinterviewerdescribesabusinesssituationafirmisinandasksyoutohelptheclientfacethatsituation.Mostoften,thecaseisanactualengagementthattheintervieweriscurrentlyworkingonorhasworkedoninthepast.Estimationcases,iftheyaregiven,areusuallyembeddedwithinabusinesscase.Inanestimationcase,youareaskedtoestimatesomethingthatyoucouldnotpossiblyknow,suchastheweightofaBoeing747.

AdditionalResources

Thefollowinglistprovidesresourcesformoreinformationontheconsultingindustryandcasecracking. Inaddition,don’tforgettocheckoutWharton’sMBACareerManagementwebsite.

Abbott,Langer&Associates-SalaryandBenefitsSurveyReportforconsultants

AssociationofManagementConsultingFirms-Information,majorevents,etc.

B-BusinessSearchEngineforNewsandJobs

ConsultingC–Newsabouttheconsultingindustry

“CracktheCase:HowtoConquerYourCaseInterviews”byDavidOhrvall(formerBainmanagerandWhartonMBAgrad)–Availableat

ExpertMarketplace-Resourceforthoseinneedofconsultingservices

Hoover'sOnline-ManagementConsultingServicesDirectory

InstituteofManagementConsultants-Information,majorevents,etc.

JobJuice-Interviewflashcardstohelpprepareforinterviews

JobsintheMoney-Goodindustryprofile

KennedyInformation-AnOverviewandProfileoftheConsultingIndustry(size,fees,futureoutlook.Publishes"ConsultantsNews"

ManagementConsultantsNetworkInternational-ManagementConsultingWorldwide

MBAJungle-Somevaluableinsightsandexperiences

MBAZone-CareersfortheMBA

VaultReports-CareerguidetoConsulting;valuableforcasepreparation

WallStreetJournal-WSJConsultingCareersand

CompensationdataWetFeetPress-Readaboutthefirms,purchasecaseguides.Anexcellentresourceforinterviewpreparation

SOLVINGTHECASE: BUSINESSCASES

ListentotheQuestion

Whileitsoundsobvious,youneedtolistenverycloselytothebusinesssituationdescribedbytheinterviewer.Oftenimbeddedinwhattheinterviewerissayingarehelpfulhintsabouthowtoproceedwiththecase.

GatherInformation

Thefirststepintheinformationgatheringstepistomakesureyouunderstandthequestion.Whileitisnotimportanttorepeatbackthequestiontotheinterviewer,questionanythingthatyouarenotclearabout.

Yourapproachwilldependontheamountofinformationyoureceiveupfront,whichcandiffergreatlydependingonthestyleoftheinterviewerandthetypeofcasesyouget.Someinterviewerswillgivealotofdetailedinformationupfrontandwillvolunteerrelativelylittleadditionalinformationlater.Insuchcases,itmaymakesensetowritedownsomequicknotestohelpyourememberthepertinentfacts.Otherinterviewersstartoutwithasimpletwo-sentencesummary,andexpectyoutoprobeformoreinformationbyaskingthoughtfulquestions.

Remember,itisexpectedthatyouaskquestions;oneofthemostvaluableskillsofasuccessfulconsultantistheabilitytoaskprobingquestions.Sometimesithelpstoprefaceaseriesofquestionswithastatementdescribingwhereyouaregoingwithyourquestioning.Soyoumaysaysomethinglike,“NowI’dliketoasksomequestionsabouttheclient’sdistributionchannels.”

AnalyzetheProblem

Whenyouhavegatheredyourinitialinformation,thinkclearlyabouttheproblemyouarebeingaskedtosolve.Itisfinetotakeamomenttocollectyourthoughts,butdon’tforgethowimportantitistomaintaineyecontact.Amajorconsultingfirmsaidthatmanyinterviewingstudentsspendtoomuchtimeatthebeginningofthecasewiththeirfactsburiedintheirnotes.Youshouldponderthecasetoyourselfjustlongenoughforyoutolayoutaframeworkforanalyzingthecasestepbystep.Thenclearlylayouthowyouwillapproachtheproblem–interviewerscannotreadyourmind,sothemorethatyoutellthemaboutyourthoughtprocessthebetter.

Rememberthatthepurposeofusingaframeworkistostructureyourthinkinglogicallyandtomakeyourlogictransparenttotheinterviewer.Donotgettheimpressionthatthereisa“right”frameworkthatyoucanlearninclassandmemorize.Thetextbookframeworksofyourintroductorybusinessschoolclasses(someofwhicharesummarizedattheendofthissection)shouldonlybeaguideinhelpingyoustarttothinkaboutframeworks.Blindlyapplyingaframeworkwillmakeyoursolutionseemcanned.Keepinmindthatcreativityandoriginalityarealsohighlyvaluedbyconsultingfirms.Thinklogicallyaboutwhatagoodwaytoapproach

theproblemwouldbe,relyingasmuchonyourlifeexperiencestodevelopyourapproachasonanystandardframework.

Anattributeofagoodframeworkisthatitbe“MECE,”whichstandsforMutuallyExclusiveandCollectivelyExhaustive.Thismeansthatyourframeworkshouldprovideyouwithanumberofdifferentoptionsthatdonotoverlap(theMEofMECE)andtogetheraccountforallpossiblecauses(theCEofMECE).Forexample,ifyouarebeingaskedtosolveaproblemaboutdecliningprofitability,donotjustlookattheexpensesideoftheincomestatement.Profitabilityisafunctionofrevenuesandexpenses,andthesetwofactorsareseparatewhiletogethertheymakeuptheentireformulaforprofitability.

Listencarefullytoanycluestheinterviewermaygiveyou.Ifyougodownthewrongpath,theinterviewerwilloftentrytoredirectyou.Forexample,whentheinterviewersays:“Areyousureaboutthat?”or“Isthattheonlypossiblesolution?”youshouldprobablyreevaluateyouranalysis.Donotbeafraidtodiscardyourframeworkorlineofquestioningandusesomethingelse.Forexample,ifyouinitiallyinterpretedtheproblemtobeamarketingproblem,butthenrealizefromsubsequentinformationtheinterviewerprovidedthatitisreallyanoperationsproblem,justsaythatyouwilluseadifferentapproachtoprobedeeperintothataspectofthecase.Ifyougetstuck,summarizewhatyouhavefoundoutuptothatpoint.Thathelpstheinterviewertraceyourlineofthoughtandbuysyousometimetothinkaboutwheretogonext.

Finally,usesimplelanguage.Consultantsarenotlookingforyoutousebuzzwords.Talktotheinterviewerasifyou'retalkingtoyourfriends,family,orformercoworkers.Itwillmakeyouseemmorenatural,andgivetheinterviewerconfidencethatyoucancommunicateclearlywithclients.

SummarizeYourFindings

Thisisthestepthatmanyintervieweesmiss–makesurethatyouanswerthequestionthattheyaskedyouatthebeginning.Forexampleiftheyaskedyouwhattorecommendtotheirclient,donotgiveananswerthatsummarizestheirsituationonly.Theywillbelookingforyoutotakethesteptowardsframingthefindingsintoaclientsolution.

Becauseofthecomplexityofsomeofthecasesyouwillbepresentedwith,itmaynotbepossibletogettothepointwhereyoustartmakingsuggestionsforimprovementsinthetimeframeallotted.Thisdoesnotmatter,aslongasyoudemonstratedyourabilitytothinkclearlyandtoapplythecorrectbusinesstoolstogettothecausesoftheproblem.Thefirmprobablytookweeksratherthanjustthirtyminutestogettothepointwhereyoustoppedintheinterview.Justpushbackandgivea“bigpicture”summaryofwhatyouhavefoundoutuptothatpointandhowyouwouldproceedwithyouranalysis.Trytobeespeciallyarticulatewhengivingyourwrap-upsummaryofthecase.

FRAMEWORKS

Thefollowingpagesprovidesomeoftheframeworksthatmayhelpyoutostartthinkingabouthowtoframeaproblem.Pleasenotethatthereisnotoneframeworkthatwillworkforeachsituation–youmustapplytherightframeworktotherightcaseasappropriate,ordevelopyourownframeworkthatworksforyou.

1: IncomeStatement

Usedforanalyzingchangesinprofitability.

Asimpleincomestatementisoftenaveryusefulframework.Byanalyzingprofitabilitythroughitscomponentfactorssuchasrevenues,costofgoodssold,andoperatingexpenses,youcanquicklydirectyouranalysis.Forexample,ifprofitsaredecliningbecauseofafallinrevenues,youmaywanttofocusonmarketingissues;ifprofitsaredecliningbecauseofrisingexpenses,youmaywanttolookintooperationsandfinancingissues.

Belowarethreewaysacompanycanincreaseprofitsandtheissuesyoumaywanttoconsider:IncreaseUnitPrice

Demandelasticity

Marketpower

Productdifferentiation

Whetherapricepremiumisjustified?

IncreaseSalesVolume

Increasesalestocurrentcustomerswithcurrentproducts

Increasesalestocurrentcustomerswithnewproducts

Increasesalestonewcustomerswithexistingproducts

Increasesalestonewcustomerswithnewproducts

DecreaseTotalCosts

Whatcostsarefixedandwhatcostsarevariable

Towhatextentandinwhattimeframearecostsavoidable

Howarecostsallocated

2: Fixedvs. VariableCost

Usedtoanalyzecoststructuresandchangesinprofitabilityandtoassesseconomiesofscaleandscope.

Thedistinctionbetweenfixedandvariablecostisextremelyimportant,andyouareboundtoencounteratleastonecasecenteringonthisissueduringyourconsultinginterviews.Makesureyouunderstandthecoststructureofacompanyinanalyzingitsprofitability.Capitalintensiveindustriessuchasmanufacturerstypicallyhavehighfixedcostswhichmakescapacityutilizationacrucialpartoftheirbusiness.Whenfixedcostsarehigh,thereareoftenopportunitiesforeconomiesofscaleorscope.Useyourcommonsensetounderstandwhattheimportantinputfactorsareforacompany,andwhetherthesearelikelytobefixedorvariable.Carefullyanalyzetheallocationofoverheadexpensesinthisframework.

3: FourC’s

Ageneraltoolforanalyzingacompanyanditsenvironment.

Toanalyzeacompany'sstrategyintermsofitschosenmarketposition,youhavetoevaluatethedifferentfactorsthatwilldetermineitssuccess.Customers'needshavetobeknownandthefirm'scapacityandcoststructureneedtobeabletosatisfythoseneedsatanacceptablelevelofprofitability.Thiscapacityandcoststructureshouldbedifficulttoimitatebythefirm'scompetitorsinordertosustaintheprofitability.

Customers

Whatdothecustomerswantandneed?

Howwillwesatisfythoseneeds?

Whatismostimportanttothem?

Howmuchwilltheypayforit?

Competitors

Whatareyourcompetitorsdoing?

Whataretheirstrengthsandweaknesses?

Howaretheymeetingthecustomers'demands?

Whatistheircoststructure?

Capacity

Whatisyourcompany’sfinancial,organizational,productionandmarketingcapabilities?

Whatareyourstrengthsandweaknesses?

Costs

Whatisyourcoststructure?

Howisoverheadapplied?

4:SWOT

Anothergeneraltoolforanalyzingacompanyinitsbusinessenvironment.

ThistoolissimilartotheFourCsabove.Itisimportantnotonlytoanalyzewhatthefirmcanandcannotdo,butalsohowthesecapabilitiescanhelpthefirmtakeadvantageofanyopportunities,orwardoffanythreatsthatoccurintheenvironment.

Strengths

Weaknesses

Usedtoanalyzethecapabilitiesofthecompany

Opportunities

Threats

Usedtoevaluatethecompany’senvironment

5: FourP's

Usefulformarketingrelatedcasessuchasnewproductintroductions,newmarketdevelopments,andmarketshareincreases.

EveryoneshouldbefamiliarwiththefourPsofmarketing:product,price,place,promotion.Theyareusedasaframeworkforputtingtogetheramarketingplan.RememberthatthefourPsaretheimplementationofastrategythatfirstdependsontheselectionofatargetcustomersegmentandproductpositioning.

6: Porter’sFiveForces

Usedtoevaluatetheattractivenessofanindustryintermsoftheabilitytoearnhighreturns.

Theabilitytoearnabovemarketreturnsdependsonthedegreeofefficiencyofthemarket.Inaperfectlycompetitivemarket,noproducerwillbeabletoearnsupernaturalreturns.Porter'sframeworkisawaytoassessthecompetitivenessofamarket,andthustheabilitytoearnsupernaturalreturns.

Suppliers–BargainingPowerofSuppliersSubstitutes–ThreatofSubstitutes

Buyers–BargainingPowerofBuyersPotentialEntrants–ThreatofEntry

AlloftheseaffecttheintensityofIndustryRivalrybetweenfirms.

Source:MichaelE.Porter,CompetitiveStrategy(NewYork:FreePress,1980)

7:ValueChainAnalysis

Usefultoanalyzehowvalueiscreatedforthecustomerandwhichpartiesareinvolved.Oftenusedtodeterminewhichpartyextractsthehighestreturnsincreatingthegoodsorservicesfortheendcustomer.

AnotheroneofPorter'scontributions,thevaluechainanalysis,ishelpfulintryingtounderstandhowanindustryisstructure