Case scoring

Case Score Sheet (For Interviewer)

Concept Low Below average Average Above Average Exceptional

Structured
Thinking
Basics

Quantitative
Skills

Business
Judgment

Hypothesis
Driven
Pluses

Prioritization

Ability to
Synthesize
Creativity

Inter-personal
A++

Skills
Confidence &
Poise

© 2011 Kellogg Consulting Club -- All Rights Reserved 13

 Case scoring

How to Score (Interviewer)

Concept What to look for

Structured Drives the case, takes ownership, follows a clear structure, takes time to think before
Thinking (s)he speaks
Quantitative Comfortable handling difficult math problems, and shows clear calculations
Skills

Business Recommends realistic solutions, demonstrates clear understanding of key concepts

Judgment for the case
Hypothesis Develops hypothesis from data and uses them to drive the analysis
Driven

Prioritization Clear prioritization of the elements that are critical, and can quickly discard data that
is not useful
Ability to Clearly summarizes the key issues to solve the problem and articulates them
Synthesize concisely
Creativity Uses data and information to draw insights from different approaches
Inter-personal Acts naturally and is pleasant to speak with
Skills
Confidence & Shows confidence when solving problems but does not sound arrogant
Poise

© 2011 Kellogg Consulting Club -- All Rights Reserved 14

 Using the case book

More info on case format types

The following represent the most common case formats on which a

case interview will be based (ranked in descending order of frequency)
Format Focus Fall‟10 Freq.*
Profit improvement Analyzing causes for recent drop in profits / ways to increase profits 50%
Analyzing a firm‟s opportunity to expand into a new geography, related
Market entry 38%
business, or customer segment
Examining the potential purchase / sale of a new or existing
Opportunity assessment 27%
business or installation / abandonment of an infrastructure
Increasing sales Identifying ways in which a firm can optimally increase sales 4%
Merger / Acquisition Evaluating whether a firm should merge or purchase another company 3%
Determining the size, usually in terms of a firm‟s revenue potential, of a
Market sizing N/A
market
Industry analysis Evaluating an industry‟s structure and/or desirability N/A
Starting a new business Similar to entering a new market; then taking an investment point of view N/A
Growth strategies Determining the optimal ways to grow a company N/A
Developing a new product Assessing a new product offering N/A
Reducing costs Identifying internal or external costs that are out of line N/A
Competitive response Evaluating ways to address a competitor‟s action (e.g., new product launch) N/A
Gathering info on why company is failing and then suggesting corrective
Turnarounds N/A
action
* Source: Fall‟10 KCC Survey of the Class of 2012‟s full-time consulting interviews; n = 154
© 2011 Kellogg Consulting Club -- All Rights Reserved 10
 General tips
20

! Make a great first impression

! Professional appearance
! Preparation
! Have needed supplies
! Plenty of pens/pencils
! Graph/plain paper
! Serviceable portfolio
! Project confidence from start to finish
! Relax (hard to appear confident if not)
! Be yourself (extremely hard to be confident if not)
 What is “fit”?
21

! Opportunity to project “consultant” during the interview

! Inquisitive, logical, confident, friendly, driven, happy
! When you describe yourself:
! Focus on a set of skills that the company wants
" Communication
" Leadership/Management
" Work under pressure / ability to deal with conflict and ambiguity
! When you describe your fit:
! Don’t repeat slogans; most firms do the same things
! Focus on what the firms consider to be their unique factors (e.g. McKinsey’s
international reach, BCG’s thought leadership, Bain’s office culture etc.)
! For in-depth probing on leadership questions (typical of McKinsey)
! Prepare a 5-10 word ‘newspaper headline’ that encapsulates the story
! Prepare beforehand a 1-2 minute description that quickly lays out the context, the
actors and the complication
! Focus on your actions and thought process and the impact of your actions that led to
the solution / eventual success
 Tips on the Fit Interview
22

! Almost every single interview involves at least some fit-

interview type questions
! Applicants have been turned down from the top consulting
firms for not having cleared the fit portions of interviews
! Very basic steps go a long way
! Smile
! Maintain eye contact
! Be honest and heartfelt
! Have a succinct story
! Practice can make perfect
! InterviewStream
! Mock fit interviews
 Tips on the Fit Interview (cont.)
23

! Do
! Establish common ground (geography, family, interests, sports, etc.)
! Ask the interviewer friendly questions
! Be confident in your answers
! Talk about something other than your qualifications (you’re interesting, so
talk about it)
! Don’t
! Discuss something controversial
! Complain about anything
! Make up elaborate questions you know the answer to
! Repeat company slogans, mottos, tag-lines, etc.
! Focus only on your business qualifications and experience
 Sample fit questions
24

! Take me through your resume

! Tell me about a time when you exhibited leadership
! Tell me about a time when you had to solve a problem
! Tell me about a time when you failed
! Tell me about a time you had impact
! What kind of leader are you?
! Why Firm X?
! Why City Y?
! Why consulting?
! What is your greatest accomplishment?
! What would you say your biggest weakness is?
! What are your long-term goals?
! How do you like school?
! What is your favorite class at school?
! What did you do last summer?
! What do you do for fun?
 Case types and case interview methods
25

! What is a case?
! A business issue/problem company is facing in a few sentences
! Takes about 25 minutes; has limited data which is usually provided if asked for
! Approach to solution is more important than the final solution
! There are two common case interview methods:
! ‘Go with the flow’ cases (typical of most firms) – You will determine which
areas to explore and lead the discussion, i.e. drive the case
! Command and control (typical of McKinsey) – Interviewer guides the discussion
and case has heavy brainstorming components and quantitative work
! Common case types* (not a comprehensive list):
! Profitability ! Industry Analysis (incl. non-profit)
! Market Entry ! Market Sizing
! Acquisition ! Capacity Expansion (incl. outsourcing)
! Organization ! Investments
*Note: one case could span multiple case types
 Overall flow of a case
26

~3 min. ~1-2 min. ~12-15 min. ~3 min.

Understand Plan your Probe for Assert a

the question approach information conclusion

• Listen actively • Mention you will take a • Follow your plan! • Drive the case to a
• Ask clarifying questions minute to plan your • Ask specific questions conclusion before time
approach to test hypothesis expires
• Take judicious notes
• Draw out a framework • Adjust hypothesis and • Answer the question
• Organize notes as slides as checklist of topics to plan as data emerges • Take a definite stand
• Formulate an initial explore
hypothesis about • Organize notes as • Make best conclusion
• Select 3 to 5 major slides with data on hand
possible solutions topic areas
• Write down key • Highlight insights from • Make recommendations
• Identify relevant sub- any numerical and follow them with
question topics calculations supporting evidence
• Present plan of attack • Note conclusions • Address “risks” and
to interviewer – start “next steps”
with the most important
 Tips: Communication, Notes & Math
27

! Communication
! Explain your thought-process when presenting your plan
! Make hypotheses when asking questions/requesting information
! Go beyond verbal communication
" Be engaging! Enjoy the case problem and work together to solve it!
" Body language (eye contact, gestures, posture); smile often but do not overdo it
" Facial expressions (Maintain composure at all times)
! Notes
! Write legibly, angle it such that the case-giver can see your work
! Use a new page for each theme you are exploring
! Circle/box insights for use in recommendations
! Math
! Draw math out clearly (especially for market sizing)
! Explain any assumptions (be reasonable with assumptions)
! Walk through your logic aloud and tie the result to the case
 7 Tips to help you stand out in the case interview
28

! Ask questions that help clarify the scope of the case and the exact question to be
answered
! Draw out as “MECE” (Mutually exclusive, collectively exhaustive) a framework / tree
as possible
! Talk about the most important branches first and explain why they may be the key
drivers; don’t just follow the sequence in which you wrote them
! When asking questions or for more data, preface them with contextual analysis, or
even a hypothesis as to what you expect the data show
! When doing math, relate the numbers qualitatively to the case, and identify/verbalize
the takeaways from your analysis
! ‘Brainstorm in buckets’: If asked to brainstorm, take a minute, identify the broad levers
that can answer the question, and run-riot with ideas. Structure and a logical approach
is always appreciated.
! When presenting recommendation – take a position! Be concise and top-down in your
recommendation (i.e. recommendation first with supporting arguments, tie in numbers if
possible). Then, mention the risks that invalidate your reasoning
 A note about frameworks
29
! There are an unlimited number of frameworks that can be successfully applied in case
interviews…
! …but knowledge of a few solid frameworks will go a long way (profitability, market
entry, go/no go investment, etc.)
! Sample frameworks can be found in the following places:
! Wharton, Ross, Stern, Tuck, Kellogg, and other school casebooks available on webcafe
! David Ohrvall “Crack the Case” and Mark Cosentino “Case in Point”
! Your knowledge from management, marketing classes and prior work experience – read the
CORE CONNECTOR published by the Wharton Consulting Club too
! Your own logical problem-solving abilities
! Cosentino and Ohrvall both offer “systems,” but these systems are essentially
combinations of individual case-type frameworks
! Use what(1) You are comfortable with, and, (2) works for you. Be as original as
possible: DEVELOP A FRAMEWORK THAT IS RELEVANT TO THE CASE PROBLEM
QUESTION AND INDUSTRY!
! Some sample frameworks are provided in the next few slides. But these are just meant
to get you started – do develop your own frameworks for each case!
 Sample framework 1: Increase profits
30

• Client’s earnings / profits (or ‘bottom-line’ in Income Statement) has declined or stopped growing
Overview • You need to recommend ways to increase profits

Sample
Framework

Market Revenues Costs Customer / Channel

• Industry • Product mix • Client cost structure • Customer Segment
- Growth (g) - Points of Parity / (Fixed / Variable) - Which segment do
- Revenues (R) difference our - PP&E (Property, we serve?
- Profits (Π) products and Plant & Equipment) - Are they most
• Competition competition prod. - Overhead profitable?
- C1 market share (s1) • Pricing (P) - SG&A • Channels
- C2 market share (s2) - Competitive parity in - Labour - Current sales mix?
- Etc. prices - Materials - Are they low-cost
- Can we ↑ prices? - IT / Systems channels?
• Volume (Q) • Benchmarks - Do these channels
- What’s our market - How do our costs attract high margin
share? stack up vs. others? customers?
- Enough capacity to • Supplier power - Incentive structures /
meet demand? performance
 Sample framework 2: Market entry; Investment
and new technology
31

• Client is considering entering a new market. Your goal is to recommend whether or not they should enter it
Overview • For these types of cases what is common is that the company is considering spending money to get some kind of
economic return. In addition to seeing whether the decision is financially sound, you have to test:
- Likelihood of implementation success based on industry conditions and firm capabilities
- Do a risk assessment

Sample
Framework

Strategic Logic Economics of decision Risks / Others

• Why are they thinking of • New market conditions • Execution/entry barriers?
market entry? - Total Revenues (R) - Channel access?
- Growth? - Total Profits (Π) - Regulatory barriers?
- Mature current market? - Growth (g) - Does firm have $ to make
- Response to competitor move? • Competition in a new market investment?
• Resources and capabilities - C1 market share (s1) • Risks
- What does the firm have that - C2 market share (s2) - Implementation risk
makes them think they can be - Etc. - Political risks?
successful? • Economics - Currency risk?
! Brand - Investment required - Macroeconomic risk?
! Patents - Expected share of revenues
! Local expertise/partners - Expected share of profits
- Profitable? Payback period?
 Sample framework 3: M&A deal
32

• Client is considering an M&A transaction

Overview • Your goal is to recommend whether or not to do the deal

Sample
Framework

Strategic Fit Deal Economics Risk Assessment

• Basic deal rationale • Valuation (Know basic • Has the company done
- Cost synergy-focus? DCF!) acquisitions before?
- Revenue-synergy - Revenue &Costs - Capability test
- focus? - CAPEX & Working Capital • Organizational cultures
- Early-stage co. being - PBT (profit before tax) - Compatible (high % of
acquired for technology? - Taxes M&A deals destroy value
- Response to competitor - PAT (profit after tax) as cultures are not
move? - Cost of capital (R) compatible)
• Type of deal - Value = (PAT / r) • Need to manage PMI (Post
- Vertical integration • Deal Price merger integration process)
- Horizontal • Synergies • Can investors not diversify
- New market entry via deal - Cost and Revenue by themselves
- Diversification move - New Firm value
• New Value > Deal Price
 Sample framework 4: Outsourcing
33

• Client is considering outsourcing an operation

Overview • Your goal is to recommend whether or not to do the outsourcing
• Do NOT make a recommendation on cost savings alone – explore areas like customer service
impact, premium customer segment impact etc
Sample
Framework

Strategic logic Decision Economics Risks / Others

• Why are they thinking of • Current costs (in-house • Risks
outsourcing? operation) - Implementation risk? Political risks?
- Cost savings? • Outsourced costs - Currency risk?
- Market entry into BRIC/other • Initial investment • Partner capabilities
markets? required - Quality of service
- Early-stage co. being - Outsourcing consultants - Lead time
acquired for technology? - IT/System investments - Technology
- Response to competitor • Net cost savings - Customer service
move? • Stakeholder mgmt.
• Customers affected - Stakeholders – job loss issues etc.
- Which segments? - Manage media & community
- What are their needs?
IMPORTANT: Sometimes interviews might make a difference between Outsourcing and Off-shoring: former refers to functions that are
done outside firm’s boundaries. Latter refers to outsourced functions done in a distant location such as India or Ireland.
 Sample framework 5: Non-profit organizations
34

• Client is a non-profit organization

Overview • Your goal is to solve the specific problem for the organization
• Important to display that you understand that non-profits have fundamentally different drivers
beside just the economics of a particular decision
Sample
Framework

Strategic Rationale Deal Economics Other

• Mission of non-profit • Planned investment • Required capabilities
- Health - What will it cost? - Does non-profit have what it
- Education - Do we have the money? takes to do this well?
- Poverty alleviation
- Etc. • Returns, if any • Risks
- Response to competitor move? - Will we be getting back - How will media perceive this
• Stakeholder opinions and likely money? decision?
reaction - Will organization make / lose - Critical to factor in
- Donors money on this? stakeholder reactions – will
- “Customers” – those who benefit this alienate donors, volunteers
from the non-profit’s services etc?
- Volunteers
- Paid staff
 After developing a framework, problem solving
requires smart follow-up questions & insights
35

• Should client enter new market? What is NPV?

• Should client do M&A? Post-merger integration risk? !Wide variety of decisions
Examples businesses face
• How can client increase profits? Quantify increase.
• How can client reduce costs? By how much? !Where possible, you will be
• Should client make new investment? What is NPV? guided to quantify
• How can client increase share? Quantify increase. improvement (i.e. to do
• How can client grow revenues? Quantify increase. some basic applied math)
• Should client outsource? Compare/value alternatives.

Some Strategic • What are industry trends?

• Info on competitors/market shares?
solution analysis !Not all issues/drivers will
• Strategic rationale underlying decision?
drivers be relevant but list should
let you quickly zone in on
Economic • What products? Prices? Volume?
key to problem
analysis • What’s the cost structure?
• Profit impact for client? ! For these drivers, think
about:
• Which customer segments? a. Changes over time?
Customers / • What are customer needs / wants? b. Compare client with
channels • What channels? Sales force? competition etc.
• Any regional/geographic concerns?
!This is meant to be a
Catch-all / • What are the risks? thought starter – not a
Other • Any regulatory issues? comprehensive list
• Any organizational behavior issues?
 Tips for giving cases
36

One should broadly follow these steps when giving cases to fellow students

Prepare yourself Make it real Step wise approach

!Read the case thoroughly !Make the experience as close to !Introduce the problem statement
real as possible
!Don’t give a case that you have not !Be serious during the case even if !Allow 3~5 mins for candidate to
studied yourself you give the case to your best friend gather her thoughts

!Have any exhibits ready for use !Be tough – test candidate’s ability !Answer any questions that
during the case to deal with a negative vibes from candidate may have
interviewer
!Be ready to take notes ! Control the time. Do not exceed !Guide the candidate accordingly if
30-35 minutes for the case portion! she is digressing from key issue

Ask questions Guide only when necessary Provide honest feed back
!Best way to make cases interesting !Give out information only when !Go back to your notes and think of
to provide necessary hints indirectly right question is asked both strengths and weaknesses
- for ex by asking related questions !Be specific – What was the mistake
!Idea is to let candidate stretch and what’s the right approach
!Follow the case flow as provided in herself and get a feel for real !Be Honest – its in candidate’s best
the original format – It helps in situation interest to make mistake with you
objective assessment and learn from them

Remember that there is no one answer to any case! A candidate can be creative enough to take a new approach towards the problem.
 Other references: Case prep
37

! There are a number of other resources to learn

about case prep. We found the following
particularly useful:
! Kellogg 2004 Casebook – Pages 5 to 44
! Ross 2007 Casebook – Pages 3 to 25

! Older Wharton Casebooks

 Remember, cases are about problem-solving
abilities, not whether you are an industry expert
38

• Case interviews span a broad range of industries. You may encounter everything from
Background Financial Services to Mining to Education to Formula 1
• Those of you who have not worked as consultants before will likely not have any
background in most of these industries
• This document can give you a very high level view of some ‘typical’ industries that
cases focus on
• You MUST attend the industry primer series led by partners from various firms as they
will capture key insights and latest trends in those industries that tend to be popular in
cases

• We believe that having a very basic overview of an industry helps to more

Our belief effectively tackle a case
• At the very least it helps you construct a framework that is most applicable to that
particular problem context. Examples:
- Consumer goods: branding is an important driver of success
- Pharma: generics manufacturers pose a major competitive threat

Important • Do not attempt to master industry specifics or memorize industry data

Warning! • You primary objective over the next few weeks/months is to master case-based
problem solving… not to become an industry expert
• Spending a little time informing yourself about the basics of a few key industries should
improve your problem-solving ability. The following pages will help in this endeavor.
 Airlines
39

Overview /
Products & • Airlines provide air transport services for passengers and/or freight
Services

• Consolidation - multiple high-profile mergers

Key Trends • Fare competition – airlines compete to undercut one another on competitive routes
• Low-cost carriers - recent entrance by smaller carriers trying to replicate Southwest Airlines’ low-cost model

Competitive • Established legacy carriers (e.g., Delta, American, United) compete with each other and with low-cost operators on
multiple domestic routes; price is usually the major competitive factor. Some domestic carriers also operate
Landscape international routes, placing them in competition with overseas airlines

• Individual consumers
Customers • Corporations/small businesses
• Travel web sites/resellers

• Internet – airline websites, online ticket resellers

• Telephone – airline call center agents
Channels • Travel agents
• Over-the-counter – walkups at airports

Profit • Revenue: Ticket revenues, excess/oversize baggage fees, food and beverage sales
• Costs: VC: fuel, food and beverage, ground crew/hourly employees FC: aircraft leases, airport gate leases, IT/admin
Summary costs, salaried employees (i.e., pilots)
 Consumer Packaged Goods (CPG)
40

Overview /
Products & • CPG companies provide consumers with a range of household products etc. soaps, pet supplies, snack foods etc.
Services
• Lifestyle/consumer behavior e.g. aging population, social networks, online advertising, go green, economic downturn
• New products critical to success
• Completely new, slightly improved, product line extensions
Key Trends • In addition, companies driving ‘outside-in’ product innovation (from outside of R&D division)
• Product mix and Brand management are critical to CPG companies
• Emerging markets – India & China – seen as important source of future growth

Competitive • Proctor and Gamble (P&G); Uniliever, Clorox, Kelloggs , Campbell’s, Frito Lay, ConAgra Foods, Colgate-Palmolive,
Landscape L’Oreal, Estee Lauder

• Individual Customers
• Discount Wholesalers (Sam’s Club, Costco)
Customers • Large box retail (Wal-mart ,Target, Safeway)
• Convenience Retail (7-11, Rite-Aid)

• Retail
Channels • Wholesale
• Direct (web and mail order)

Profit • Revenue : Volume of goods sold; Price premium on branded goods

Summary • Cost s: Branding, Sales and Marketing, COGS (commodity costs – raw & packaging material)
 Financial Services: Consumer Banking
41
Overview / • Provide deposit-based services, credit cards, consumer loans, payments etc.
Products & • Broad range of financial products are sold by banks whose main function is to collect money from those who have
Services savings and loan money to those who need it.

• Credit crisis / financial meltdown threatened solvency of industry due to illiquid assets difficult to value
• Consolidated, mature industry with primary growth through acquisitions
Key Trends • Demographic shift (baby boomer aging) creating large market for retirement products
• Offshoring of various functions to reduce expenses (e.g. call centers, back office functions)

• Large national players (Bank of America, Citi) compete with regional banks.
Competitive • Largest players services extend well beyond commercial banking to investment banking, securitization, proprietary
Landscape trading, etc with services that are increasingly opaque

• Individual consumers
Customers • High net worth consumers (priority segment)
• Small/medium businesses without sufficient size for larger investment banking financing services

• Still large face-to-face presence with bank branches, tellers, etc

Channels • Increasing use of ATM services, online banking
• Banks increasingly offer credit cards, home loans, etc as means to increase asset base

• Revenue: Net revenue is the spread between bank’s borrowing cost and the rates charged to borrowers; fees
Profit Summary • Costs: Overhead (branches, administration, compliance); Salaries; Bad Debt Expense
 Financial Services: Insurance
42
Overview / • Insurance is fundamentally about underwriting various types of risks. Customers make regular payments (premiums) to
Products & the insurer for coverage when unforeseen events, e.g. car crash; fire damage; death; credit default) occur
Services • The insurer invests premiums to generate sufficient income to match future assets with future liabilities

• Credit crisis / financial meltdown threatened solvency of industry due to illiquid assets difficult to value
• One of the global leaders (AIG) nationalized in credit crisis, emphasizing the importance of monitoring investment
Key Trends portfolio
• US national healthcare policy changes could completely change the landscape of the health insurance market
• Companies focused on managing risk and controlling costs

Competitive • Several large, integrated players operating across multiple parts of the industry (AIG, Prudential, etc)
Landscape • Some niche players focusing in a particular segment (Geico )

• Individual consumers seeking to manage risk at home / on the road

Customers • Small/medium/large businesses seeking to manage risks of property damage, liability, etc

• Insurance agents (sales force) still manage much of the front-end sales process to businesses/individuals
Channels • Online sales becoming easier with better websites and aggressive marketing
• Direct marketing to employees via in-office demonstrations (Aflac supplemental insurance, etc)

• Revenue: Net revenue is the spread between premiums collected and claims/payments made over time
Profit Summary • Costs: Overhead (administration, compliance); Salaries; Sales Commissions; Marketing
 Manufacturing
43

Overview / • Manufacturing sector includes companies that are in the business of mechanical, physical, or chemical transformation of
Products & materials/substances/components into new products
• Subsectors include: textile, paper, chemical, computer/electronics, transportation equipment, machinery
Services
• Manufacturing is highly cyclical in most sectors
• US manufacturing, traditional strength of US economic growth, has suffered due to higher cost structure (labor in many
Key Trends cases) as companies outsource manufacturing to lower-cost regions of the world

• General Motors, Chrysler, Ford, Toyota, Honda

Competitive • Boeing, Airbus
• GE, Phillips, Siemens
Landscape • Honeywell, Dow, Corning

• Varies by industry, can be end-consumer, OEM (original equipment manufacturer) – B2B

• Automotive: Primarily end consumer; Metal: airplane, automotive, tool/die manufacturing; Apparel: End Consumer;
Customers Plastics: medical industry, machinery manufacturing; Infrastructure/Machinery: Government, Utilities, Rail operators;
Chemicals: pharmaceutical, process technology, semiconductor manufacturing

• Retail (Automotive, Apparel – industries where end-consumer is primary customer)

Channels • Wholesale – B2B (Plastics, Chemicals, Pharmaceuticals, Metal, Machinery, Semiconductors, Computer Hardware –
Industries where the customer is another business)

• Revenue: diversity of customers, volume (automotive: high, airplane manuf: low), emerging markets, adjacent industries,
new technologies/products, end-consumer demands
Profit Summary • Cost: outsourcing (potential quality), process efficiency, supply chain management (inventory turns), labor (unions), raw
materials/commodities, channel management (ie. Auto dealers), marketing, capital investment
 Media
44

Overview / • The media sector includes print, audio and video content generation and dissemination. The various subsectors are
Products & unique yet have many overlapping attributes. Primarily an advertising-supported industry, the media space faces
unprecedented challenges as online media continues to disrupt traditional business models.
Services
• The digitization of media has required considerable capital investment by media content generators. The rapidly
improving speed of the wired internet and wireless devices creates questions about how media will ultimately be
Key Trends consumed – via internet, via cable, via mobile? Service providers may converge over time. The proliferation of
“free” content has harmed content generators but created opportunities for new channels.

Competitive • Varies by subsector. Media players generally compete for audience interest in order to generate more advertising
revenue. Landscape is very competitive with a few major players owning integrated portfolios across the entire
Landscape media universe (Disney, Viacom, News Corp, etc)

• While individual consumers seem to be the customers, in reality consumers are part of the product. Audience reach,
Customers ratings, circulation measures are utilized to sell advertising. Potential advertisers are the real customers in traditional
models although individual consumers may be the customers for some subscription models.

• Print: traditional paper product & online / mobile

Channels • Television: traditional broadcast / cable / satellite & online / mobile
• Movies: traditional theatres, rentals & online (to a growing extent)

• Revenue Drivers: advertising, subscriptions in some cases (there is talk about moving to higher subscription model for
Profit premium content)
Summary • Cost Drivers: VC: production costs (salaries of staff, technology); FC: capital costs (studios, printing presses);
overheard, marketing & advertising
 Pharmaceuticals
45

Overview / • Branded/ Ethical/ Originator drug producers produce original patent-protected (for a certain period of time) drugs
for human and animal diseases
Products & • Generic drug producers produce ‘copy-cat’ drugs (with the same medical result) at a lower development cost when
Services the originator drug’s patent expires

• Price competition from generic drug manufacturers

• Increasing pressure from health insurance companies and hospital chains to reduce prices
Key Trends • R&D challenge of finding high revenue drugs (‘Blockbusters’ have annual sales > $1B)
• Loss of patent on key drugs for many large Pharma Cos. around 2010-11

• Key success factor comes down to one thing: products

Competitive • Products target various treatment areas (TA): cancer, cardiovascular, psychology etc
Landscape •
•
US, Europe and Japan are largest markets although emerging market opportunity (eg. China) is growing
Food & Drug Authority (FDA) needs to approve all drugs before sale

• Doctors who prescribe these medicines

• Insurance companies that pay for them
Customers • Patients/consumers who need these drugs/medicines
• In some emerging markets, various officials (hospital, provincial and central government) may control channel access

• Over the counter (“OTC”, can be sold without prescription): Retail outlets – CVS, Walgreens; Mail order
Channels • Prescription drugs: Hospitals; pharmacies
• B2B: Distributors / intermediaries ; hospitals; pharmacies

• Revenue Drivers: Size of specific treatment area / level of competition; Buy-in from doctors that will prescribe; Speed
Profit to market/ expertise in difficult products (for generics)
Summary • Cost Drivers: VC: sales and marketing (doctor visits, sponsored studies); FC: R&D (drug discovery, formulation, clinical
trials; a lot of this is now outsourced; generic companies only need to perform clinical trials)
 Private Equity (Go/No Go Investments)
46
Overview / • Equity that is not publicly traded
Products & • Common forms include Leveraged Buyouts (LBOs), Venture Capital (VC), Mezzanine Capital, Distressed Investments,
Services and Growth Capital

• Larger amounts of equity required for each deal

• Potential wave of deals failing in the coming years
Key Trends • Buying and selling of current PE commitments likely to increase over the next few years
• Growing need for PE firms to have cash margins

Competitive • Deal volume has sharply declined recently

Landscape • Large (e.g. KKR, Carlyle, Blackstone, TPG), Mid ($250M to $5B), and Small Market PE shops

• New customers of PE deals may be corporations

Customers • Institutional investors
• Customers can range from small family-owned companies to large corporations

• Leveraged Buyouts: controlling interest (of equity) is acquired through high borrowing
• Venture Capital: investors give cash in exchange for shares/control of invested company; typical with start-ups
Channels • Mezzanine Capital: financing that contains equity based options and subordinated debt (e.g. convertible loans)
• Growth capital: financing to expand, restructure, or enter new markets with little change in management
• Distressed Investments: investing in financially stressed companies

• What financial levers can be pulled to make this more profitable (various ways to access cash, cap structures, etc)?
• What operational levers can be pulled to make this deal better (more efficiencies, new management etc)?
Profit Summary • What return on investment is required to make this investment worthwhile?
• What is the timeframe of return on this investment?
• Is there a better (more profitable) investment where money should be spent?
 Technology
47

Overview /
• The technology industry broadly consists of the systems (PCs, servers), semiconductors, communications equipment,
Products & software, internet and IT services subsectors.
Services
• Increasing M&A Activity: As growth has slowed in certain subsectors (systems, software), leading vendors have utilized
M&A for growth, offering customers a one stop shop proposition (ie HP/Compaq, Oracle/Peoplesoft)
Key Trends • Co-opetition: Leading vendors co-exist as competitors and collaborators. This is a key characteristic of the industry
and has become even more so as players move into adjacent subsectors. Examples include: Microsoft/Intel,
Oracle/IBM
• Cloud Computing: Offering IT as outsourced utility has implications across subsectors
• Systems: IBM, Hewlett-Packard
• Semiconductors: Intel, Samsung, Toshiba, Texas Instruments
Competitive • Communications Equipment: Cisco, Nokia, Samsung
Landscape • Software: Microsoft, IBM, Oracle / Internet Software: Google, Yahoo!, Microsoft
• IT Services: Accenture, IBM, HP/EDS

• Relevant splits:
Customers • By size: Enterprise, SMB (small/medium businesses), Retail
• By type: Business vs. consumer

• Varies by customer focus. Business/Enterprise-focused players tend to rely on direct sales force.
Channels SMB/Retail/Consumer tend to rely on indirect channels.

• Systems: Lower margin (COGS management key to profitability)

• Semiconductors: High fixed costs (capex) and highly cyclical; manufacturing utilization
Profit • Communications Equipment: Manufacturing utilization
• Software: license/maintenance versus subscription service model; renewal rates; high gross margins, but high R&D
Summary expenses
• IT Services: staff utilization; revenue per employee
• Internet: revenue per click
 Telecommunications / Mobile
48
• Telecommunications is a mammoth industry, comprising companies that make hardware, produce software, and provide
Overview / services. Hardware includes a vast range of products that enable communication across the globe, such as broadcasting
satellites, telephone handsets, fiber-optic cables etc. Services include running the switches that control the phone system,
Products & Mobile and Internet access, and configuring private networks by which international corporations conduct business.
Services Software makes it all work, from sending and receiving e-mail to relaying satellite data to controlling telephone
switching equipment.

• The industry has grown and evolved at an incredible pace for the last 20 years. Mobile phone penetration
approaching 50% globally; Mobile broadband subscribership has topped 200 million worldwide; rollout of 3G
Key Trends networks in emerging markets causing mobile broadband subscribers to outnumber fixed-line broadband subscribers.
• Many households are giving up their landline, preferring to use a cell phone or VoIP services (Skype, Vonage) on their
computer.

• Landscape is very competitive and wireless carriers have undergone a wave of consolidation: In recent times, Cingular
Competitive acquired AT&T Wireless; Sprint joined Nextel; and ALLTEL acquired Western Wireless.
• Big 4 cellular players are AT&T, Verizon, T-Mobile and Sprint Nextel
Landscape • Cable companies attempting to capture wireless customers through wireless service offerings of their own (or in
partnership) e.g. Comcast introducing WiMAX service in Portland, Ore; COX will offer cell phone service late ’09.

Customers • Individuals, companies and governments.

• Carrier-owned stores and leading retailers like Wal-Mart, RadioShack and Best Buy are significant channels for
mobile phone sales and service.
Channels • Major carriers have online stores for phone and service purchases. They are joined online by all of their retail
competitors (Best Buy, Walmart, RadioShack) as well as amazon.com, wireless specialty retailers like letstalk.com and
Wirefly.

•Revenue Drivers: Subscriptions, data services (SMS, email and internet access on cell phones), mobile advertising, app
Profit stores.
Summary •Cost Drivers: VC: marketing & advertising, salaries; FC: capital costs (equipment, infrastructure – cell towers, network
maintenance, stores); overhead
Porter’s Five Forces
Source: Michael E. Porter, -Competitive Strategy: Techniques for Analyzing Industries and Competitors

Michael Porter's Five Forces is probably the most famous framework used in preparing for the case interviews. It has endured as one of the frameworks
most talked about by many in and out of the consulting field. Although the Five Forces is an excellent framework in helping you organize you thoughts,
like any other framework we cover in this guide, its analysis is not complete. The Five Forces should be used in conjunction with other frameworks to
enable you to fully understand the issues at hand. Further, we only briefly touch on this framework here, but we have included more detailed material of
Porter's work later in this guide.
New
Entrants
Competitive advantage in an industry is dependent on five primary forces:
• The threat of new entrants
• The bargaining power of buyers/customers
• The bargaining power of suppliers
• The threat of substitute products
• Rivalry with competitors

The degree of these threats determines the attractiveness of the market:

Buyers Competitive Suppliers
• Intense competition allows minimal profit margins
Rivalry
• Mild competition allows wider profit margins

The goal is to assess whether a company should enter/exit the industry or

find a position in the industry where it can best defend itself against these
forces or can influence them in its favor.

Substitute
Products

HBS Case Interview Guide, Page 4

Porter’s Five Forces
Source: Michael E. Porter, Competitive Strategy: Techniques for Analyzing Industries and Competitors

Barriers to Entry: Relationship with Suppliers:

There are a number of factors that determine the degree of difficulty A supplier group is powerful if:
in entering an industry: • It is not obliged to contend with other substitute products for
• Economies of scale sales in the industry
• Product differentiation • The industry is not an important customer of the supplier
• Capital requirements vs. switching costs group
• Access to distribution channels • The supplier group is an important input to the buyer's
• Cost advantages independent of scale business
• Proprietary product technology • The supplier group's products are differentiated or it has built
• Favorable access to raw materials up switching costs
• Favorable location • The supplier group poses a credible threat of forward
• Government subsidies integration
• Learning curve
• Government policy Substitute Products:
Substitute products that deserve the most attention are those that:
Relationship with Buyers: • Compete in price with the industry's products
A buyer group is powerful if: • Are produced by industries earning high profits
• It is concentrated or purchases large volumes relative to
seller's sales Rivalry:
• The products it purchases front the industry are standard or Rivalry among existing competitors increases if:
undifferentiated • Numerous or equally balanced competitors exist
• It faces few switching costs • Industry growth is slow
• Buyers pose a credible threat of backward integration • Fixed costs are high
• The industry's product is unimportant to the quality of the • There is lack of differentiation or switching costs
buyer's products or services • Capacity is augmented in large increments
• The buyer has full information

HBS Case Interview Guide, Page 5

Marketing/Strategy Concepts Review – Overview
The Marketing/Strategy Concepts Review Module attempts to enable the interviewee with skills needed to evaluate the case from the perspective of
a senior executive. Consultants are hired by their clients with the primary objective of providing a clear and fresh perspective on the dynamics of the
client's business and the industry within which the organization is competing. Remember, management consultants, contrary to popular belief, are
NOT in the business of selling advice. They are in the business of selling CHANGE and IMPACT.

The Marketing and Strategy concepts/frameworks are intertwined—hence the reason they are covered in the same module - and will provide you
with some of the techniques often used in Cracking the Case:

Contribution Sizing and

4 Cs 4 Ps Analysis Segmentation

• Consumer • Product • Unit Contribution • Market Sizing

• Company • Price • Break-Even Volume • Market Share
• Competitors • Place • Break-Even Market Share
• Collaborators • Promotion • Total Contribution
• Net Profit

HBS Case Interview Guide, Page 6

 Marketing/Strategy Concepts Review – The 4 Cs

4 Cs Knowing the 4Cs framework and the details upon which the framework is based is crucial to Cracking the Case. This
framework offers both breadth of the larger forces that are at play and depth of the intricacies that lead one to effective
decision making.

Having said that, this framework is only meant to be a tool that allows you to develop your own thinking. The 4Cs
framework (and each subsequent framework covered in this guide) is not Mutually Exclusive and Collectively
Exhaustive (MECE). Rather, your understanding and mastery of the ideas that underlie the framework (and the other
concepts covered) will help you create a systematic and flexible way of structuring your own customized tools to
identify the specific problem in question, assess the competitive landscape, and formulate high impact solutions.

Consumer

Collaborators

Company Competitors

DO NOT attempt to tackle a case during the interview by saying, "I would like to use the 4Cs framework..." Before you
even finish your sentence, the interviewer will have made up his/her mind to ding you. This point will be emphasized
many times during this guide.

HBS Case Interview Guide, Page 7

 Marketing/Strategy Concepts Review – The 4 Cs
4 Cs Your analysis often times needs to begin with identifying the consumer/customer. In doing so, an important distinction
to keep in mind is that the “customer” and the “consumer” can be two different entities. For example, a store that sells
primarily toys would have the adult, or purchasing unit, as the “customer” and the children as the “consumers” or “end
user”.
CONSUMER

Identifying and serving the needs of BOTH the customer / purchasing unit and the consumer / end user are
crucial to sustaining competitive advantage. Below are some issues to consider when looking at consumers
and customers.
Define the Market

What needs are we

The Decision Making Unit aiming to serve? Situational Factors

• Who uses the product? • Nature of Use?

• Who purchases the product? • Purchase occasion? 1st time?
• Who makes the choice? • Stability of choice set?
• Who influences the choice? • Any new information about
• Who pays for the product? The Decision Making Process existing alternatives?

• Type of process:
o Low involvement?
o Utilitarian?
o Hedonic?
• Choice of Sequence?
Product Use o What triggers the needs? Nature of the Product
o How are alternatives evaluated?
• How much? o What impact has the information • What is the nature of the
• How often? had on the decision? relationship and why?
• When? Where? With whom? • Does the product meet or
• What aspects of product exceed expectations?
performance are not salient?

HBS Case Interview Guide, Page 8

 Marketing / Strategy Concepts Review – The 4 Cs
4 Cs
There are two main analytical evaluations that must be used when looking at the company: 1) the company’s strengths
and weaknesses through internal analysis, and 2) its strategic posture within the broader marketplace through an
examination of external forces.

CONSUMER
Company

Internal External
Analysis Analysis

• Supply/Demand
General • Demographic
Key Trends • Socio-cultural
Success • Political/legal
Factors • Technological
(KSFs) • Macroeconomic
• Global

• Industry Evolution
• Fragmented Industry
Value Financial Industry • Emerging Industry
Chain Analysis Analysis • Maturing Industry
• Declining Industry

Benchmark Against Strategize Against

Competitors

HBS Case Interview Guide, Page 9

 Marketing / Strategy Concepts Review – The 4 Cs
4 Cs During the interview process, many students tend to neglect the analysis of the internal environment of a company.
Failing to do so could misconstrue the “sexier” external analysis and guarantee you a ding letter.

A firm’s competitive advantage, and ultimately its financial success, is the result of both process execution and
COMPANY structural position. A firm’s overall strengths and weaknesses and its ability to execute may be more important than its
environment in determining its sustainable competitive positioning.

KEY SUCCESS FACTORS (KSFs)

Internal KSFs are the essential ingredients that allow a company to sustain a long-term competitive advantage.
Analysis
Examining the company’s KSFs will help you better understand the nature of the company and how it operates (both
internal and external). KSFs are the driving force behind every successful company. Companies must try to capitalize
on their KSFs while at the same time recognize and strengthen their weaknesses.

Key
Success Examples of some KSFs:
Factors Operational Factors: i.e., product mix; inventory turnover; sales force; low cost structure; etc.
Competitive Standing: i.e., small-niche player; brand equity; customer loyalty; trend setter; large economies-of-scale
player; etc.
Organizational Structure: top management structure; meritorious environment; reliable mid-management; highly-skilled
labor; etc.

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 Marketing / Strategy Concepts Review – The 4 Cs
4 Cs
THE 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
COMPANY “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.

Internal
Analysis

Customer
Acquisition Customer
Value Raw Materials Operations Delivery Retention
(i.e., relationship with (labor & capital (Channels of (method &
Chain effectiveness of (free repair hotline;
suppliers; JIT delivery; cost utilization; cycle distribution; warranties; bonus
structure of raw material) time; quality) intermediaries) marketing; cost of
customer plan; frequent
acquisition; sales customer discount)
force issues)

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 Marketing / Strategy Concepts Review – The 4 Cs
4 Cs FINANCIAL ANALYSIS
Understanding the financial health of the company is the basis for developing a sound strategy and marketing plan.
Interviewers are not, however, looking for you to be an investment banker. If they were, you would be interviewing at
Goldman Sachs or Morgan Stanley. What they are looking for are the basic abilities to analyze a balance sheet and/or
COMPANY
income statement when shown, and to calculate a few simple ratios to provide a historical assessment of the company’s
performance.

Internal
Analysis Balance
Sheet & Income
Statement

Financial Cash Flow

Financial Ratios Analysis
Analysis

Time Value Net Present Cost

of Money Value Accounting

HBS Case Interview Guide, Page 12

 Marketing / Strategy Concepts Review – The 4 Cs
4 Cs Developed by McKinsey & Co., The Seven S Model is the best framework to help you align the company’s
organizational components under one strategic umbrella. Examining the organizational aspect of the company can be a
major component in your attempt at Cracking the Case. Many brilliant strategies fail because the “softer” side of the
company is neglected. When appropriate, make sure you touch on some of the issues raised by the Seven S Model
COMPANY framework and whether they support or hinder your recommendations.

The structure in which rules and responsibilities are

specialized and dispersed, and the channels of authority are
The competencies that are held outlined (e.g., organizational structure; channels of
by the organization – not just communication; chain of command – or the lack of)
Internal the people (e.g., skills and
Analysis experience of the people; best
management practices; The company’s approach to
innovation; superior service) Structure recruitment, selection, training,
and blending of qualified staff
(e.g., on campus recruiting;
Actions that the company formal training; prior
takes to gain a sustainable experience; leadership and/or
The Skills management skills)
advantage in the
Seven S marketplace (e.g., low Strategy
Model cost; high quality; new Staffing Style
Shared
product development; The leadership style of upper
entering new markets) Values management and the day-to-day
operations of the company (e.g.,
hierarchical; meritorious;
The basic values that are widely norms; common practices)
accepted and practiced with the
company and act as the guiding Systems
principles of what the company
stands for (e.g., a shared The formal and informal processes and procedures
understanding of the purpose used by the company to manage itself on a daily
the company serves and its basis (e.g., budgeting; planning; compensation;
vision for the future; being the performance measurement; management control
biggest or the best) systems; information systems).

HBS Case Interview Guide, Page 13

 Marketing/Strategy Concepts Review – The 4 Cs
4 Cs
EXTERNAL ANALYSIS
The external environment plays a critical role in shaping the destiny of the market place and the companies that
comprise it. One of the most fundamental concepts in the managing of corporations is that CEOs must adjust their
COMPANY strategies to reflect the evolutionary or revolutionary forces that shape not only the domestic market, but increasingly
more importantly, the global one as a whole.

The external environment is, however, a vast • Supply/Demand

• Demographic
External and complex beast that must be approached General
• Socio-cultural
Analysis Trends
with caution and serenity. To be practical and • Political/legal
• Technological
effective during the interview, focus your
• Macroeconomic
attention on the parts of the environment that • Global
are most relevant to the business in question. • Industry Evolution
We will examine a number of issues in the • Fragmented Industry
• Emerging Industry
External Analysis, all of which, or none of Industry • Maturing Industry
which, could be germane to analyzing the crux Analysis • Declining Industry

of the problem.

This is where your judgment, as in all other frameworks covered, comes in to play in determining what is important to
discuss and what will cause you a ding letter. There is nothing more irritating to the interviewer than for the interviewee
to come off as knowing everything, providing a laundry list of issues. Part of what makes a consultant successful is the
ability to quickly discern between what seems to be important and what clearly is not.

HBS Case Interview Guide, Page 14

 Marketing/Strategy Concepts Review – The 4 Cs
4 Cs
EXTERNAL ANALYSIS: GENERAL TRENDS
Below is a list of some of the general issues the interviewee should consider when examining the external forces that
have strategic implications for the company. It is by no means exhaustive. Again, it is up to you to determine which
COMPANY factors are at play and which ones need not be mentioned.

Supply/Demand Political Forces

• In the recent past, has there been a change in • Are there any legal or political restrictions such as
the supply of the product in the marketplace? new legislation that would impede the sale of the
• Has the demand for the product shifted as new product?
External fads or substitute products enter the scene? • What regulations must be addressed before the
Analysis product can be introduced (health
Demographics regulations/antitrust, etc.)?
• Has the age/race/gender base changed? Is it
expected to change in the short-term? Long- Technology
term? • What are some of the technological trends in the
• What are some of the discernible market that could help/diminish the sale of the
characteristics for each of the customer product (e.g., paper-based media vs. internet)?
General segment groups that you are targeting? • What R&D advancements were made by the market
Trends
that would have a long-term impact on the very
Socio-cultural survival of the company (e.g., pay-per-view video
• What are some of the norms/cultural practices vs. video stores)?
that should be considered when entering a new
market? Macroeconomics
• Are there any trends in religious • Has the performance of the economy as a whole had
practices/traditions/rituals that should be an impact on the sale of my product? Interest rate?
considered? Unemployment figures? Exchange rates? Balance
of Payments? Free-Trade Agreements?

HBS Case Interview Guide, Page 15

 Marketing/Strategy Concepts Review – The 4 Cs
Source: Michael E. Porter, Competitive Strategy: Techniques for Analyzing Industries and Competitors
4 Cs
EXTERNAL ANALYSIS: INDUSTRY ANALYSIS
For the Industry Analysis, we turn to the works of the father of competitive strategy, Professor Michael Porter. We
have summarized below some of the key points of his book, Competitive Strategy: Techniques for Analyzing
Industries and Competitors, the definitive source for understanding the analysis, formulation and implementation of
strategic direction. Competitive Strategy is a must for want-to-be management consultants. For the sake of Cracking
COMPANY the Case, you need not read the book in its entirety as the highlights are summarized below. However, it is
recommended that you purchase a copy of the book to study some of the aspects that interest you or for further
elaboration on certain concepts.

1. Structural Analysis within Industries

External Strategic Groups

Analysis • Strategic groups are defined on the basis of a conceptual construct of strategic posture
• When determining strategic groups, include the firm's relationship to its parents
• Overall entry barriers depend on the particular strategic group that the entrant seeks to join
• Mobility barriers provide barriers to shifting strategic positions between strategic groups
• Strategic groups will affect the pattern of rivalry within the industry

Industry Strategic Groups and Profitability

Analysis • The higher the mobility barriers, the more profitable the firm is within the strategic group
• Low-cost position within the strategic group may be crucial, but low-cost position overall is not necessarily the
only way to compete
• Achieving low-cost position overall often involves a sacrifice in other areas of strategy, like differentiation,
technology or service, on which other strategic groups are based

Implications for Formulation of Strategy

• The principles of structural analysis help us better determine a firm's strengths and weaknesses
• Looking at strengths and weaknesses illuminates two important and yet different elements: 1) structural and 2)
implementation

HBS Case Interview Guide, Page 16

 Marketing/Strategy Concepts Review – The 4 Cs
Source: Michael E. Porter, Competitive Strategy: Techniques for Analyzing Industries and Competitors
4 Cs
2. Industry Evolution

• You must determine how the next phase in the evolution will affect the mobility barriers and bargaining position
with suppliers and buyers
COMPANY • The product life cycle is limited in a number of ways:
o the duration varies from industry to industry
o industry growth does not always go through the S-shape
o companies can affect the curve through innovation
• You must look at the evolutionary processes that drive life cycles
• Every industry begins with an initial structure - the evolutionary processes work to push the industry toward its
External potential structure - which is rarely known completely as an industry evolves
Analysis • Because of technological change, innovation and identities of the firms, it is very difficult to predict evolutionary
stages
• There are some predictable and interacting dynamic processes that occur in every industry in one form or another
and at different speeds:
o demographics
o trends in needs
Industry o substitute products
Analysis o complementary products
o penetration of customer group
o product change
o product innovation
o changes in buyer segments served
o process innovation
• Industry consolidation and mobility barriers move together
• No concentration takes place if mobility barriers are low or falling
• Exit barriers deter consolidation

HBS Case Interview Guide, Page 17

 Marketing/Strategy Concepts Review – The 4 Cs
Source: Michael E. Porter, Competitive Strategy: Techniques for Analyzing Industries and Competitors
4 Cs
3. Fragmented Industries
A fragmented industry is an industry in which no firm has a significant market share that can strongly influence the
industry outcome.

COMPANY Steps for formulating competitive strategy in Overcoming fragmentation:

fragmented industries: • Create economies of scale or experience curve
• What is the structure of the industry and the • Standardize diverse market needs – coalesce tastes
positions of competitors? • Neutralize or split off aspects most responsible for
• Why is the industry fragmented? fragmentation (i.e., production or service delivery process)
External • Can fragmentation be overcome? How? • Make acquisitions for a critical mass
Analysis • Is overcoming fragmentation profitable? • Recognize industry trends early
Where?
• Should the firm be positioned to do so? Coping with fragmentation:
• If fragmentation is inevitable, what is the best • Tightly manage decentralization: keeping individual operations
alternative for coping with it? small and as autonomous as possible, reinforced with central
control and a strong promotion-from-within policy
Industry
Analysis An industry is fragmented for the following • Building of efficient low-cost facilities at multiple locations
reasons: • Increased added value: providing more service with sale,
• Low overall entry barriers enhance product differentiation, or forward integration
• Large number of small and medium-size firms • Specializing by product type or product segment
• Absence of economies of scale or experience • Specializing by customer type; perhaps the customer with the
curve least bargaining power
• High inventory costs or erratic sales • Specializing by type of order: fast delivery
fluctuations • A focused geographic area
• No advantage in size in dealing with • Bare bones/no frills
collaborators • Backward integration: selective backward integration may
• Diverse market needs lower costs and put pressure on competitors who cannot afford
• High product differentiation such integration

HBS Case Interview Guide, Page 18

 Marketing/Strategy Concepts Review – The 4 Cs
Source: Michael E. Porter, Competitive Strategy: Techniques for Analyzing Industries and Competitors
4 Cs
4. Emerging Industries
The essential characteristics of an emerging industry from the viewpoint of formulating strategy are that there are no
rules of the game. The overriding aspect of emerging industries is great uncertainty, coupled with certainty that change
will occur.
COMPANY
Common Structural Characteristics: Strategic Choice:
• Technological uncertainty • Shaping industry structure: through its choices, the firm
• Strategic uncertainty - no right strategy has been can try to set the rules of the game
clearly defined • Developing relationships with channels
• High initial costs but steep cost reduction • Shifting mobility barriers: making new commitments in
External • Embryonic companies and spin-offs - many new capital and technology
Analysis companies are formed and many spin-offs from • Timing entry: early entry or pioneering involves high
personnel leaving from existing companies to start risks but may involve otherwise low entry barriers and
new ones offer a large return
• First-time buyers - the marketing task is one of
inducing substitution, getting the buyer to purchase Techniques for Forecasting:
the product instead of another • The device of scenarios is a particularly useful tool in
Industry
emerging industries
Analysis Common mobility barriers faced in emerging • The starting point for forecasting is estimating the future
industries/problems: evolution of product and technology, in such terms as
• Proprietary technology/absence of product or cost, product variety, and performance
technological standardization • The next step is to develop the implications for
• Access to distribution channels competition for each product/technology/market
• Access to raw materials and other inputs – rapid scenario and then forecast the probable success of
escalation of raw material different competitors
• Cost advantage due to experience • An emerging industry is attractive if its ultimate
• High risk-capital requirement/high cost structure (not its initial structure) is one that is
• Erratic product quality consistent with the above-average returns and if the firm
• Regulatory approval can create a defensible position in the industry in the
• Response of threatened entities: substitutes or labor long run
unions

HBS Case Interview Guide, Page 19

 Marketing/Strategy Concepts Review – The 4 Cs
Source: Michael E. Porter, Competitive Strategy: Techniques for Analyzing Industries and Competitors
4 Cs
5. Industry Maturity

Some of the probable tendencies for change in a mature Strategic Pitfalls:

industry are as follows: • A company’s self-perception: “we are the quality
COMPANY • Slowing growth leads to more competition for market leader”, these perceptions may be inaccurate as
growth transition takes place or buyers’ priorities adjust
• Selling to experienced repeat buyers • The cash trap: when investing in this stage, cash
• Greater emphasis on cost and service should be invested only if it can be pulled out later
• Core business processes are undergoing change • Giving up market share too easily for short-run
External • Industry profits decrease profits
Analysis • Resentment and irrational reaction to price
Maturity may force companies to confront, for the first competition (“we will not compete on price”) and to
time, the need to choose among the three generic strategies: changes in the industry
1) cost leadership, 2) differentiation, and 3) focus • Overemphasis on “creative” new products rather
• Product line rationalization: a quantum improvement in than improving and aggressively selling existing
the sophistication of product costing necessary to allow ones
Industry cutting of unprofitable items from the line • Clinging to “higher quality” as an excuse for not
Analysis
• Correct pricing: maturity often requires increased meeting pricing and marketing moves from
capability to measure costs on individual items and to competitors
price accordingly
• There is a greater level of “financial consciousness” along
a variety of dimensions
• Product innovation: designing the product and its delivery
system to facilitate lower-cost manufacturing and control
• Increasing scope of purchases: increasing purchases of
existing customers may be more desirable than seeking
new customers
• Buyer selection: identifying good buyers and locking them
in becomes crucial

HBS Case Interview Guide, Page 20

 Marketing/Strategy Concepts Review – The 4 Cs
Source: Michael E. Porter, Competitive Strategy: Techniques for Analyzing Industries and Competitors
4 Cs
6. Declining Industries

Declining industries are those that have experienced an absolute decline in unit sales over a sustained period.
The accepted strategic prescription for decline is a “harvest” strategy – eliminating investment and generating
COMPANY maximum cash flow from the business, followed by eventual divestment. Volatility of rivalry increases and is
accentuated by suppliers and distribution channels.

Exit Barriers: Strategic Alternatives in Decline:

• The higher the exit barriers, the less hospitable the The range of strategies can be conveniently expressed in
industry will be to the firms that remain during the terms of five basic approaches, which the firm can pursue
External decline individually or in some cases sequentially:
Analysis • Firms may face barriers because the business is • Leadership: seek a leadership position in terms of
important to the company from an overall strategic point market share
of view • Niche: identify a segment of the declining industry that
• A consideration that is very important is management's will not only maintain stable demand or decay slowly
emotional attachments and commitment to a business, but also has structural characteristics allowing high
coupled with pride in their abilities, accomplishments returns
Industry and fears about their own future • Turnaround: alter strategy of the company by
Analysis reinventing the organization both internally and its
Choosing a Strategy – Some Analytical Steps: outward relations with the market
• Is the structure of the industry conducive to a hospitable • Harvest: the firm seeks to optimize cash flow from the
decline phase? business by eliminating or severely curtailing new
• What are the exit barriers facing each firm? investment, cutting maintenance of facilitates, and taking
• Who will remain and who will leave? advantage of whatever residual strengths the firms
• Of the firms that stay, what are their relative strengths possesses
for competing in the pockets of demand that will remain • Quick divestment: this strategy rests on the premise that
in the industry? the firm can maximize its net investment recovery from
• What are the firm's relative strengths vis-a-vis the the business by selling it early in decline
pockets of demand that remain?

HBS Case Interview Guide, Page 21

 Marketing/Strategy Concepts Review – The 4 Cs
Source: Michael E. Porter, Competitive Strategy: Techniques for Analyzing Industries and Competitors
4 Cs
COMPETITOR ANALYSIS

In light of the analysis of the consumer and the company itself, both internally and externally, we can further
examine the company's standing in the market place and its future strategic direction. Keep in mind that the
COMPETITORS company analysis covered should also be used when assessing the strength of competitors. Here are some
additional high-level concepts in dealing with competitive analysis.

1 – Competitive Analysis 2 – Market Signals

There are four diagnostic components to a competitor analysis: Market signals can be a truthful indicator of
• What drives the competitor? competitor’s intention or it can be a bluff.
1) Future goals: at all levels of management and in Type of market signal:
multiple dimensions • Prior announcement
2) Assumptions: held about itself and the industry • After the facts
• What is the competitor doing and what can the • Discussion of the industry
competitor do? Studying the competitor’s historical
3) Current strategy: how the business is currently relationship between a firm’s announcements
competing and its moves can greatly improve one’s
4) Capabilities: both strengths and weaknesses ability to read signals accurately

3 – Competitive Moves
• Market structure: sets the basic parameters within which competitive moves are made
• Threatening moves: a competitor must predict and influence retaliation
• Perceptual lag: involves delay in competitors perceiving or noticing the initial move
• Retaliation lag: cutting price might be immediate, but it may take years to launch a product change
• Conflicting goals: one firm can retaliate, but it can hurt itself somewhere else in its business
• Denying a base: after the competitor has made its move, tactics for denying a base include strong price
competition, heavy expenditure on research, loading the customer up with inventory, etc.
• Commitment: guarantees the likelihood, speed, and vigor of retaliation to offensive moves and can be the
cornerstone for defensive strategy - it can deter retaliation
• Focal point: a prominent resting place on which the competitive process can converge its expectations

HBS Case Interview Guide, Page 22

 Marketing/Strategy Concepts Review – The 4 Cs
Source: Michael E. Porter, Competitive Strategy: Techniques for Analyzing Industries and Competitors
4 Cs
COLLABORATORS: Strategies to Deal with Suppliers and Distributors

When it comes to buyers and suppliers, one of the key issues to keep in mind is to understand what percentage does the
buyer represent of a supplier’s output, and what percentage of the buyer’s purchases does the supplier’s output represent.

COLLABORATORS This sets the basic leverage for negotiating/co-operating between suppliers and buyers.

Strategy toward Buyers and Suppliers

Buyer Selection
• Buyer selection, the choice of target buyers, becomes an important strategic variable
• There are four broad criteria that determine the quality of buyers from a strategic standpoint:
o Purchasing potential
o Growth potential
o Structural position: intrinsic bargaining power and propensity to use it
o Cost of servicing
• Good buyers can be created through strategy:
o Build up switching costs
o High-cost buyers can and should be eliminated

Supplier Strategy
• Key issues in purchasing strategy from a structural standpoint are as follows:
o Stability and competitiveness of the supplier pool
o Optimal degree of vertical integration
o Allocation of purchases among qualified suppliers
o Creation of maximum leverage with chosen suppliers - avoid switching cost, threat of backward
integration

HBS Case Interview Guide, Page 23

 Marketing/Strategy Concepts Review – The 4 Ps
4 Ps PRODUCT

In examining the competitiveness of a company's product, whether it is a new product being introduced on the
market or an existing product manufactured by the company, one needs to examine the product itself. The
following are some of the questions that you might find helpful in assessing the competitiveness and "fit" of a
product:
• Does the product have the right positioning in the marketplace?
o Does it serve a particular segment of the market?
o Is it a mass market or niche product?
PRODUCT o Is it differentiated enough to stand out against the competition?
• What kind of brand equity does the product uphold?
o What are some of the issues/risks associated with the "image" or "perception" of the brand relative to other
brands in the market?
o What are some of the features that can be added to the product that would add to the value or the perception
of value to the consumer?
• What are some of the packaging issues that might present an opportunity or impediment to increased sales?
o Does my packaging reflect the positioning of the product? If mass market, does it have a mass market appeal?
o How does the product fit in the overall strategy of the company?
o How does the product relate to other products produced by the company?
o What kind of a financial role is the product playing (i.e., cash cow, long-term profit potential, etc.)?

POSITIONING MAP Hi
This is a helpful framework to analyze where the product is positioned Branded
Commodity Premium
against competitors and consumer segments and to help you determine if
Price
there is any untapped opportunity in the market.
Under-
Commodity priced?

Lo

Lo Value Hi

HBS Case Interview Guide, Page 24

 Marketing/Strategy Concepts Review
4 Ps PRICE

Getting the right price for a product is extremely important for the success of the company. Unfortunately,
sometimes the right price is not easy to determine. Depending on the price elasticity of the product, a 1%
increase in price has anywhere from a -20% reduction to a 25% increase in net income.

The most important factor of what ultimately drives price is the customer's perceived "value" of the product. For
example, if a company produces shirts with a unit cost of $10, but the market perceives the product as
fashionable or has the right brand name, the shirt can then be priced to capture any consumer surplus at $50 or
even $80 per shirt. The same manufacturer introduces another shirt at the same cost the following season. This
time, however, the shirt is no longer considered in vogue and thus has little "value." This time, the shirt would
PRICE
be priced at $25.
Competition Pushes Perceived Value
Other factors that determine the price of a product are: Prices Down To Consumer
• The Cost to Produce COGS: maintain low costs to Untapped Consumer
Surplus: Value Created
capture bigger profit margin Price of a for the Consumer
Substitute
• The price paid previously - the expected price: if
consumers are used to paying a certain price for a
Set Price
product, it is very difficult to convince them of Here
paying a $20 premium for the same product.
Expected
However, if their perceived value of the product is Price Profit Margin:
higher than what they paid in the past, then there's Value Created for
the Seller
room to capture some consumer surplus
• The price of substitutes: the price of a product is Total Costs:
COGS
driven down if the product can be easily substituted Marketing Pushes
Prices Up
by another that serves the same function $0

HBS Case Interview Guide, Page 25

 Marketing/Strategy Concepts Review
PLACE/DISTRIBUTION
4 Ps
After having assessed the product positioning and gained an understanding of who your customers are, you need to
develop strategy around which distribution channel you need to use and where to sell your product. The distribution
channel can be through a third party or through an in-house sales force, and is responsible for transmitting the company's
product to the customer (wholesaler, retailer, end user).

The distribution channel that is selected and the outlets at which the product is sold MUST be aligned with the positioning
of the product and focused customer segment.

There are many issues to consider when examining the place/channel distribution. Below are just some thoughts that you
may want to consider when formulating strategy on delivering the product to market:
PLACE
• Which channels are most closely aligned with the company's strategy?
o Does the company need to build new channels or eliminate existing ones?
• What functions does the company want the channels to serve?
• Does it make more sense to go direct to the end-user or deliver the product through intermediaries?
• What are the economics of the channel?
o Who needs to capture what margin?
o Does this fit in with the intended selling price of the product?
• How much control is the company willing to give up on the delivery of the product?
o Is the company willing to work in conjunction with the distribution channel, by monitoring its timeliness and
service, or by placing most of the weight on the channels in meeting customer needs?
o What would be the relationship of the company's sales force in this arrangement?
• How would the company address any potential shifts in power to the channel?

HBS Case Interview Guide, Page 26

 Marketing/Strategy Concepts Review
4 Ps PROMOTION/BRANDING

Promoting and developing a specific brand for the product captures the most value not only by the supplier in
being able to increase sales volume and per unit margin, but also by the consumer in developing a certain
perception of the product.

Again, promotion and branding must be aligned with the other "Cs" and "Ps" that have been covered thus far. The
message that is communicated to the consumer, and in turn what the consumer believes about the product, will
drive the success of the product.

Promotion and branding can consist of a number of elements such as traditional advertising (mass or niche), or no
advertising to maintain certain perception of exclusivity, word of mouth, direct mail, etc.
PROMOTION
• What message are we trying to communicate? What is the objective?
o Is the goal to achieve a household name? Build loyalty? Defend the product's positioning?
o Does the message portray the total customer experience?
• What are some of the barriers to communicating the desired message?
• Does the promotion/branding focus on the long-term view of relationship building with the consumer?
o Does it encourage repeat purchasing? Focus on customer retention?
• How is the marketing strategy different from the competition?
o How will the competition react?
• Which vehicles will you use to influence the decision making process?
o Pull strategy: (direct at end user) use of advertising, direct mail, telemarketing, word of mouth, consumer
promotions
o Push strategy: use of trade promotions, sales aids and/or sales training programs
• How much money is being allocated to marketing?

HBS Case Interview Guide, Page 27

 Marketing/Strategy Concepts Review – Contribution Analysis
Contribution
Analysis The following is a framework that you can use to help you understand the economics of the contribution of a
product. This framework is very important when forecasting the overall success of the product.

Tools
Calculate the contribution
that each unit provides to Unit Contribution Examples
cover fixed/overhead costs Unit Selling Price + $50.00
- Variable Cost - $21.25
= Unit Contribution $28.75
Determine the number of
units that need to be sold to Break-even Volume
break-even Fixed Costs $30,000
Unit Contribution $28.75/unit =

1,043 units
Assess the percentage of the
market share that needs to be Break-even Market Share
captured Break-even Volume 1,043 units
Total Market Share 14,300 units =

7% Market Share
Estimate the contribution of
all units sold (net revenue – Total Contribution
variable cost) Unit Contribution + $28.75
x Number of units sold for the year * 1,700 units
= Total Contribution to OH & Profit = $48,875
Calculate the net profit for
the year Net Profit
Total Contribution to OH & Profit + $48,875
- Total Overhead Costs - $30,000
= Net Profit = $18,875

HBS Case Interview Guide, Page 28

 Marketing/Strategy Concepts Review – Market Sizing And Segmentation
Sizing &
Segmentation In determining the potential market size for a product, always use round numbers. For example, estimating the
population of the U.S., use 250MM instead of 273MM; 50MM households instead of 52MM. This makes the
calculation more fluid, as you are tested on your logic and not on you ability to add and subtract.

Market Sizing Market Share

Determine the estimated

number of customers in # of Customers Total Population
your market segment Targeted in Question

X X
# Purchases Made Can you increase the # of Customer
per Period demand for the product Targeted
in your targeted area?
Think about how this
differs when you consider
different groups within X X
Can you expand the
your market segment market for a particular
# Units per % Share of
Purchase product type? Product Type
(e.g., mountain bike vs.
speed bike)
X X
What price is the different Can the company increase The Company’s %
segments/consumer Price per Unit its product type? Share of Product Type
groups willing to pay?

= =
Total Revenue in Company’s % Share
Market of the Market

HBS Case Interview Guide, Page 29

Operations Concepts Review
Operational effectiveness is an integral part of sustaining competitive Competitive Customer
Advantage Needs
advantage. Maintaining a well-tuned manufacturing plant can result in a
less expensive and higher-quality product produced. This in turn drives
up demand for the product as the company is able to compete on price
Marketing Corporate
and quality. Hence, manufacturing operations must be consistent with the & Design Strategy
overall strategy of the company.

Many firms will give you cases that require some operations thinking.
Other cases may not necessarily require them, but you would greatly
impress the interviewer if you displayed some relevant operational Manufacturing
Supplier Strategy
analysis in your diagnosis of the problem. The Operations Concepts
Relationship
Review will cover just some brief concepts that you can use in Cracking
Product
the Case. If you feel that you need additional information, consult other Design
sources from more in-depth review.

Competitive Advantage Through

Performance Measurement:
Low Costs
High Quality
Fast & reliable Delivery
High Customer Satisfaction

HBS Case Interview Guide, Page 30

Profitability Framework
Many of the cases presented during the interview may deal with issues of declining profitability. This is a very helpful framework in
laying out your thoughts in an organized fashion and systematically tackling the issues. The Profitability Framework starts off by
stating that profit is simply a function of revenue and costs. When a company is facing declining profitability, either revenue has
decreased, costs have increased, or both. The idea here is to understand which side of the equation is pulling profitability down and
how to go about rectifying the problem.

On the revenue side, a number of factors have been listed that can have an impact on revenue. This list can be three times as large,
depending on the case. However, do not provide a laundry list of issues that you think might impact revenue. Whatever you write
down must be of significance. Having said that, you should try to list a few more factors under revenue than you are willing to cover.
The reason being is that interviewers would like to see you acknowledge that although these factors can have an impact, you have the
ability to prioritize as to the most important!!

On the cost side, you need to see if costs have increased, causing profitability to go down. It is always a good idea to understand what
type of cost has increased. Your interviewer will expect you to provide specific ways on improving costs for the company.

When you use the Profitability Framework, make sure that Profit
you walk through it first with your interviewer before you
begin the analysis. Explain why you are using this Revenue Costs

framework and the structure of it. Provide the road map Price
Cost
Accounting
Consumer
before you start driving.
Volume Variable
Competition Fixed
Product
Mix

HBS Case Interview Guide, Page 31

Helpful Hints
1. Keep in mind that the case interview is also an interview of interpersonal skills. The interviewer will be looking at your poise, confidence,
communication skills, enthusiasm, energy, persuasiveness, etc.

2. When the case is presented, make sure you fully understand the question and write it down, capturing all of the relevant details. Ask questions
to clarify any ambiguities and reiterate the situation back to the interviewer before you begin the analysis.

3. Take a minute to capture your thoughts on paper. As much as you might have the urge to, DO NOT start talking about the analysis right away.
Politely ask if you can take a few moments to write your thoughts down. Almost always the interviewer will be expecting it, and will be glad
to give you time to structure your framework.
Remember, do not try to force the case into a specific framework or use a framework verbatim like the 4Cs or Porter’s Five Forces.
Incorporate your own various concepts as necessary.

4. Briefly walk your interviewer through your framework. Explain the path you want to take, outlining your rationale for choosing it.

5. Ask relevant questions to gain further insight. Remember, asking the right questions is key. You are only given information to the questions
that you ask, and if you make assumptions, state them clearly.

6. Do not rush to get to "a solution." You are being evaluated, most importantly, on your logic and the process of your analysis. The
recommendation you give at the end is only as sound as the thought process you used. So think out loud!

7. Even though there might not be "a right answer," there certainly are approaches that are better than others. Stay focused on the problem at
hand. Do not digress into detail that may not shed light on the issue just to sound impressive. You will not!

8. Use nice and easy numbers whenever you are estimating market size, price, costs, etc. You do not want to start factoring decimals.

9. Develop clear and decisive recommendations. Provide options and a recommendation based on you analysis as to which solution is most
suitable to achieve the objective at hand.

10. Practice. Practice. Practice. Cracking the Case is mostly a developed skill. Understand the reasoning behind each case. The more cases you
practice, the more you will be exposed to the different problems and the more you will be prepared. Leave nothing to chance. Good Luck!!!

HBS Case Interview Guide, Page 32