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Before we look at individual Cases, it is important to begin by looking at analysis frameworks that
commonly can be used to address Case Study questions. In this chapter, we will outline some of the
core frameworks and some additional Consulting concepts that are important to grasp and will form
part of many interviews. The frameworks will be helpful to answer certain types of cases, depending
on the type of case. In reality, few case interviews or real-life business situations cover just one
concept or business problem, so you have to have the flexibility to apply a range of
concepts/structures. For example, a Company bringing a new product to market would require a
market size analysis, competitor analysis, as well as understanding the key customer segments.
The more you practice, the easier the cases will become and the more articulate and structured youll
be in your answers.
An important note on this: historically, the vast majority of Consulting candidates have used
specific business frameworks to answer cases. Frameworks remain important as concepts to answer
Case Studies, but you should absolutely avoid any rigid use of a specific framework. In reality, the
main purpose of learning the frameworks is to help you to structure your answers, just as the case
The key frameworks that follow should be used directly in certain Case situations, but more broadly
they should be used as a way to expand your strategic thinking, which is the critical component of
success in the Case Study interview process. Ultimately, a top-flight candidate will build his or her
own framework/structure for evaluating the Case as it progresses, often drawing from many of the
frameworks and concepts in this module, and potentially others. In other words, you should
absolutely avoid using the phrase, I will apply framework X to this case. However, be aware of
the famous frameworks in case they are mentioned in an interview setting, and dont be shy about
referencing them as you dive into the specifics of the Case Study youre evaluating.
It is probably the most famous of all of them. It was introduced by Harvard Professor and Monitor
Consulting firm founder Michael Porter. Porters Five Forces is a high-level framework that you can
draw upon to perform a market landscape and competitor dynamics analysis. It can help determine
whether a market or company is attractive, whether the client for whom the analysis is being
performed is a private equity firm thinking about buying a company, or a major company thinking
about entering or exiting a certain market segment. In most cases, a Case Study will address at least
b. Economies of scale
c. Cost advantage (for example, unique access to lower raw material costs)
2. Competitive Dynamics
b. Industry fragmentation
3. Supplier Power
4. Buyer Power
5. Threat of Substitutes
The 3 Cs
This simple framework has been around for a long time as a way to think about any industry or
company, and applies broadly to a wide range of Case Study questions. If you compare the
description below to that of Porters Five Forces above, you will see that there is substantial overlap.
1. Company
2. Competitors
3. Customers/clients
THE 3 CS
1. Company: the first C is about understanding the operations of the Company itself and how
Product/service offering
Value chain
Profitability analysis
Capacity
Core competencies
Regulatory environment
Distribution network
Other
2. Competition: the second C is about understanding how the competitors impact your client
Competitor mix/make-up
Market share
Fragmentation
Management
Competitor products/services
Value chain
knowing your clients/customers. Always ask for available customer information, as knowing
Customer mix
Price
Product characteristics
Brand
The 4 Ps
This framework is often used specifically whenever there is a marketing component involved in a
case (for example: how to increase sales resulting from any profitability optimization case, deciding
on an approach to enter a market, etc.). When combined with the 3 Cs, this framework can cover
many topics and as you practice more Case Study questions, youll develop a better sense of when
1. Product
2. Price
3. Promotion
4. Placement
THE 4 PS
proposition.
Commoditized or differentiated?
Commoditized or differentiated?
Switching costs
2. Price: it is critical to understand the Companys optimal pricing strategy. Price is often the
key driver of profitability and success. Review the pricing optimization section for more
points on pricing this also offers a good approach of the key issues to consider on price.
Price elasticity
commoditized?
Customer loyalty/lock-in
Supply/demand: current state of demand and supply for the product or service
Market positioning
Status
Profitability
What is the cost for the client to produce the product or offer the service?
3. Placement: this is about getting the products to the customers/clients and how the
Transport/logistics
4. Promotion: This aspect (which could be called marketing strategy, if only the word
marketing started with the letter p) is about reaching and attracting the customer/client.
There is overlap here with other areas, especially product, because a big part of product is
understanding customer wants and needs which helps determine the promotional aspects.
Customer/client awareness
SWOT analysis is more of a mini-framework, specifically for quickly evaluating a single company in
an industry. In that regard, its far less complete than other frameworks, and can often miss
important details. However an interviewer could potentially ask you for a SWOT analysis, and you
SWOT ANALYSIS
4. Threats: Company threats within the industry (or potentially from companies whose
It should be noted that SWOT can be extended from comparing a specific company to the others in
the industry, to comparing a specific industry or sub-industry to other, related industries or sub-
industries within the economy. For example, a classic SWOT analysis might entail benchmarking
Delta Airlines with the airline industry as a whole; an extension could entail benchmarking the
Other Frameworks
You should be very familiar with the well-known frameworks already discussed in this chapter,
although it is unlikely that an interviewer would ask you to use a particular framework in your
analysis. Instead, it is typically expected that you draw on the concepts encompassed by these
frameworks and/or the concepts that we will outline in the next chapter, which breaks down the
In addition to these frameworks, there are a number of other frameworks that you will read about on
certain Consulting firm sites, but you will probably not be expected to know them in detail or apply
them specifically in an interview. It does not hurt, however, to be familiar with them. Therefore, we
include these example frameworks for your reference and encourage you to at least familiarize
The BCG Growth Share Matrix for evaluating product or business lines
There are additional, relatively simple analytical techniques that you should be prepared for in
Consulting Case Study interviews. These techniques tend to be numerical, and occur frequently,
although none are comprehensive or broad enough to fall into the category of a Framework:
Break-Even Analysis
Opportunity Cost
BREAK-EVEN ANALYSIS
The gist of Break-Even Analysis cases is that the Fixed Costs of a businessi.e., the costs
Presumably, each incremental sale contributes to profit at a rate that can be determined (or at
least estimated); the question that is to be answered is, How many units do I have to sell in
In other words, the Break-Even Point is the number of units sold at which Revenue equals
Break-Even Analysis is often applied when deciding whether to develop a new product or
make a capital equipment investment, as well as helping in making decisions around how to
Note that the expression (Revenue per unit Variable Expenses per unit) is often referred to
An understanding of how to analyze Expenses and differentiate Fixed Expenses from Variable
Break-Even Analysis can get more complex, as there are microeconomic and macroeconomic
considerations that can change both the Fixed and Variable Expenses, but the basic concept is
an important one; therefore you will likely come across some form of Break-Even Analysis in
Note that this concept can also be translated into a question on Break-Even Price, i.e.,
Assuming a certain volume of sales, what is the sales price required in order to break even?
Formulaically, Break-Even Price = (Fixed Expenses Sales Volume) + Variable Expenses per
unit.
Note that the expression (Fixed Expenses Sales Volume) equates to the required Unit
Contribution Margin at the assumed Sales Volume in order to break even. In other words,
Break-Even Price = Required Unit Contribution Margin + Variable Expenses per Unit.
production or sales levels. These expenses can be viewed as unavoidable, at least in the
short-term. Typical examples for Fixed Expenses include Rent, Insurance, Mortgage
Variable Expenses (or Variable Costs) are impacted by changes in production or sales
levels typical examples include are Raw Materials, Direct Labor Expenses (wages and
When analyzing a Case, always keep in mind that total Fixed Expenses remain constant as
volume rises (or falls), but Fixed Expenses per unit decline as volume rises (rise as volume
falls). For example, if a computer component manufacturer has $1,000 of Fixed Expenses and
produces 100 components, then the $1,000 of Fixed Expenses will be spread across 100
components (= $10 of Fixed Expenses per unit). If the Company produced 200 components,
then the Fixed Expenses per unit would decrease to $5 per unit.
Margin or Net Income Margin), he or she will usually be referring to the total Net Income
of a company or business line as a percentage of its Revenue: Net Profit Margin = Net Income
Total Revenue.
The interviewer could also refer to Gross Profit Margin, which is simply Gross Profit as a
percentage of revenue: Gross Profit Margin = Gross Profit Total Revenue
Similarly, the interview may also refer to Operating Profit Margin (EBIT Margin), or
EBITDA Margin. In both cases, thus is simply the figure in question (Operating Profit,
invested. ROI is used in consulting interviews as a way to evaluate the return of a particular
Standard ROI is calculated as follows: Profit from the Investment (Revenue minus Costs)
Capital Invested.
Note: Return on Assets (ROA) is a variation of this concept, but instead revolves around all
capital invested in a project (Liabilities + Equity), rather than just Equity invested, which is
such as number of units sold, a population, or an investment must grow in each year to reach
a given end value over a certain amount of time. (Note that this is not the only growth path to
grow from a beginning number to an ending number, but it is the only growth path that is the
The formula to calculate CAGR is: [(Ending Value Beginning Value)^(1 Number of
Years)] 1.
For example: If sales grew from $1,000 in the year 2001, when a store opened, to $2,100 in
CAGR is very similar in concept to Internal Rate of Return (IRR), which is the annual rate
of return on an investment if its value grows by a specific multiple over a specific amount of
time.
Use the Rule of 72 to estimate CAGR whenever possible. The rule of 72 simply states that a
quantity will roughly double in value whenever the number of years times the annual growth
Using the above example, we can see that the quantity slightly more than doubled, so
the answer should be slightly above (72 11) percent, or slightly above 6.6%. Indeed, it
is!
The idea behind this microeconomic analysis is to determine the reasonable cost to win or
acquire a customer (or to maintain an existing customer, i.e., prevent him or her from
churning, or switching to a competitor). It can also be used to determine level and type of
customer service to provide, and as another way to estimate the value of a business. (In
theory, the value of a business should equal the number of existing customers the LCV per
Estimate the remaining customer years; in other words, how long is a typical customer
Estimate future Revenue per year per customer, based on product volume per customer
price
Estimate Total Expenses for producing those products (either separating Fixed Costs
Calculate the Net Present Value of the future profit (Revenue Expenses) per
customer (in other words, discount these future profits back into todays equivalent
dollars)
the annual market size for a given market/industry. It is often used by companies to project
Formulaically, Annual Market Size = Total Revenue of a product outstanding Average life
of the product. For example, Total Revenue of a product outstanding might represent the
sticker price of all cars driven in the US, while the Average life of the product would be the
It is also worth knowing the four steps in the Product Life Cycle Curve, as the concept
therefore has very rapid growth rates (for example: electric cars)
Growth: Product adoption is becoming widespread but still growing at an above-
comes only from price increases and growth in GDP (for example: breakfast cereal)
market competition has resulted in total growth rates that are below-average or
OPPORTUNITY COST
Opportunity Cost simply refers to the concept that if a person or company does X, the
business and consumer decision making, as there are only finite resources available in most
Thus, for example, it is unwise for a company to invest $1 million in a project earning $3
million if that same investment prevents it from investing the $1 million in another
opportunity that would earn $10 million. In this case, the Opportunity Cost can be defined as
the loss of incremental profit of $7 million ($10 million potential profit lost minus the $3
million earned).
If X does not prevent also doing Y, then there is said to be no Opportunity Cost of doing X
with respect to Y. In the above example, if the company had $2 million to invest and the
capacity to manage both projects, it could reap the profits from both projects, i.e., $13 million.
and Price.
Specifically, Elasticity is the ratio of a percentage change in quantity to the percentage change
Change in Price.
For example, if an increase in the price of oranges from $1.00 apiece to $1.50 apiece causes
demand for those oranges to fall from 100 units to 80 units, then the % Change in Quantity =
20% and the % Change in Price = 50%. Therefore the Elasticity of Demand = (20 50)
= 0.4.
Note that for normal goods, Elasticity of Demand will always be negative (higher prices
mean less quantity is purchased) while Elasticity of Supply will always be positive (higher
prices mean that suppliers are willing to produce and/or supply more goods).
The concept comes up in multiple types of cases, such as pricing optimization. Clients often
ask what the impact would be on volume if they adjust the price. Usually the correct answer is
to increase prices in Inelastic markets (price increases lead to a relatively small decrease in
products sold) and decrease them in Highly Elastic markets (price increases lead to a large
Unlike Investment Banking interviews, which can be detailed and highly technical in terms of
Finance and Accounting, Consulting interviews and the Consulting job itself revolve much more
around estimation and exercising business judgment and what-if analysis. Rarely would a
Consultant be called upon to develop and maintain a detailed, precise financial model for
That being said, a basic-to-moderate understanding of the Income Statement, Balance Sheet and
Statement of Cash Flows, and how they work together, is very relevant to many interviews. (You
might even be provided with a basic Income Statement or Balance Sheet of a company as part of a
Rather than reinventing the wheel and writing content on Finance and Accounting in this guide, we
recommend you review any standard, basic Financial Accounting textbook to familiarize yourself
Statement of Cash Flows (Cash Flows broken out into the following categories of sources:
We also recommend that you familiarize yourself with some basic core Finance concepts (Net
Income, EBIT (Operating Profit), EBITDA, Free Cash Flow, Internal Rate of Return, Net Present
Value, and Enterprise Value are good places to start) and core Valuation techniques (Cost of Capital,
Comparable Company Analysis, Precedent Transaction Analysis, Discounted Cash Flow analysis,
and Leverage Buyout analysis). Although these concepts will not be tested and do not form a major
part of general Consulting Case Study interviews, these topics can appear in a general discussion
about a particular business situation and you should be able to discuss them at least on a basic level.
If you are applying for a job in Business Development, or for a Consulting position in a Corporate
Finance group or at a firm that does a lot of Corporate Finance Consulting work, then you should
definitely study up and be prepared for these core Finance and Accounting concepts, because they
will likely be tested on in detail in your interviews. In addition to introductory Finance and
Accounting textbooks, we highly recommend that these candidates read the Street of Walls
Investment Banking Technical Training guide, which addresses complex details around Financial
Statements, Accounting and Valuation at a very detailed level. (We also recommend this training
guide in general to anyone who is interested in advancing their Finance and Accounting skills
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