Professional Documents
Culture Documents
Determine
Key
Issue(s)
Develop
Hypotheses
Gather Data /
Test Hypotheses
Develop Options
Refine Answer
As the interviewer describes the situation, think about what are the key issues
facing general managment
Develop hypotheses
Make
Recommendatio
n
Using Frameworks
There is no golden rule, more than one framework may be applicable
Use an appropriate framework
Do not force a framework
Be hypotheses driven
Be prepared to revise your hypotheses
Mutually Exclusive and Collectively Exhaustive (MECE)
Listen for clues from the interviewer
Accept direction from the interviewer
Display your thinking visually / graphically
Be transparent in your analysis
Leave time to summarize and make recommendations
Market Sizing
Determine The Key Drivers
Bottom Up or Top Down?
Make Assumptions
Calculate
Use Round Numbers!
Common sense check!
Analyze Results
Implications?
Increasing Factors
Decreasing Factors
Adjust Answer
Adjust Answer
Declining Profits
What's Driving
the Decline?
Gather Information
Analyze Using
Profit Equation
Revenues
Volume
Price
Decreasing
Expenses
Decrease
Product Mix
Increase
Comp. pressure?
Selling Less
Profitable Items
- Market Conditions
- Competition
Fixed Costs
- Added Capacity?
Variable Costs
Unusual Expenses
- Writeoffs
- Lawsuits
Increase Profitability
Revenues
Price
COGS
Unit Volume
Direct Material
Price Sensitivity
- Elasticity
Existing Market
- Promotion
- Place
Scale Economies
/Diseconomies
- Supply Constraints
Competitive Environ.
- Substitutes
New Markets
- Geographic
- Economies of Scope
Inventory Mgmt.
- Carrying Costs
- Shrinkage
SG&A
Direct Labor
Variable O/H
Replace w/machines
- Union?
Cost Acctg.
- Allocation Drivers
- Does pricing
reflect Cost
Increase Capacity?
Market Demand
Industry Capacity
Competitors Plans
Market Trends
Threats
Improve Productivity
Add Capacity
Cyclical / Seasonal
Bottlenecks
Add shifts
Economy
Acquire
Global Competition
Consumer tastes
Substitutes
Outsource
Customer Turnover
What Has Changed in
the Following Environments?
Company
Customer
Competition
Regulatory
Product
Is quality sagging?
Tastes changing?
Do new tax
incentives exist?
Price
Have sensitivities changed?
Overpriced versus our competition?
Disposable income?
Place
Is our distribution getting squeezed out?
Are Customers Changing Channels?
Promotion
Are we spending?
Push vs. pull?
Competitive Response
Customer
- What do they want?
- How do they choose?
Values/Tastes
Price Sensitivity
Competitor
- Where are we positioned?
- Where is the competition?
Purchasing Habits
Product
Company
- How do we add value?
Resources to respond?
Business relationships
Place
Susbsitutes
Disposable income
Distribution channel
Demographic changes
Mature market?
Bundled product?
Cost structure
Distributor
Tangible
Vendor
Intangible
Customer
Price
Promotion
New customers?
Normal good?
Finances
Customer
Does product met a need?
Competition
Is there any?
Yes
Product
Have we done homework?
What does the segment want?
Proliferation of products already?
Price
Have we explored sensitivity?
Can we make a profit at this price?
Many
Is market growing?
Promotion
Push or Pull?
Cost of launch?
Will current promotions help?
Place
Is distribution aligned with customer?
Are we experienced in this channel?
Company
Can we do it?
No
Few
Yes
Can we beat them?
No
Can we erect some?
Finance
Are we able to finance the launch?
Should we buy an existing producer?
Operations
D0 we have capacity?
Supply network?
Marketing
Will we cannibalize existing products?
Is this a complement / bundled good
Does it build on resources?
International Expansion
Internal
External
Quantitative
Educational Differences
Amount
Is organization consistent
with overseas 'autonomy'
Timing
- Startup / disposition
- Operating
Corporate Values
- Bribery
Worker's conditions / child labor
Seasonality
- Weather
Discount Rate
Distribution system
- Transportation infrastructure
- Different channels
Political Climate
- Instability
Local Market
- Size
- Competition
Cash Flows
Investment Decision
Investment Decision
Other Factors
NPV Analysis
Useful Life
Cash Flows
Discount Rate
Strategic Fit
Synergies
Environmental
Political
Timing
- Missing Links
- Seasonality
Stability
- Opportunity Cost
- Inflation
of Value Chain
- Volatility
Regulation
- Risk Adjust
Size
- Market Potential
- Outflows
- W orking Capital
- Inflation
Demand Cycle
Competitors
- Current Supply
Potential
Demand
Company Acquisition
Understand Purpose
Diversification?
Gain Market Share?
Geographic Expansion?
Analyze Opportunity
Internal Factors
External Factors
Strategic Objective
Resources
Acquisition Fit
Industry Attractiveness
Identify Acquisition
Candidates
Soft Issues
- Culture/Fit
- Management
Hard Issues
- Price
- Balance Sheet
Self-Help
W hite Knight
Classic M&A
Is there a Firm That...
Yes
No
Do W e Have Cash?
Yes
Then Buy Back Stock
to Raise Stock Price
No
Can W e Release Good News
to Raise Stock Price?