Consulting Basics:

Frameworks
Richa Agrawal
Rachit Agarwal
Quick Recap
Two types of case interviews:
Case Study: Scenario based problem solving
Guesstimate: Finding an approximate value
How to solve a case?
Open a case (Take time and frame preliminary questions)

Analyze and Fragment the problem (Fit frameworks, Value chain, etc)

Close the case (Conclude the problems you found, and give recommendations)
Guesstimate
Problem: # burgers sold in McDonalds outlet in one day?
Guesstimate
Problem: # burgers sold in McDonalds outlet in one day?

Where is the outlet? What type of burgers? Take away or Have-it?

Guesstimate
Problem: # burgers sold in McDonalds outlet in one day?

# burgers = #have-it burgers + #take-away burgers

#have-it burgers : Demand or Supply? (See what is the restriction/ limitation)

Guesstimate
Problem: # burgers sold in McDonalds outlet in one day?

# burgers = #have-it burgers + #take-away burgers

#have-it burgers : Demand or Supply? (See what is the restriction/ limitation)

#have-it burgers = total working time/time for one burger.

Framework: Profitability

Profit

Revenue Cost

#units sold Price/ unit Fixed Cost Variable Cost

Company specific or Industry wide?

What is expected of you?

Problem? Solution?
Revenue?

Cost?
Change

Both?
 Revenue?

Revenue
Streams?

# units sold Price per unit

Will be discussed in
pricing strategies
Demand Supply
 Cost?

Cost
Streams?

Variable Fixe
d

#Units Sold Cost per unit

 Lets Start

Problem: Steel manufacturer is facing reduced profits. You have been

hired to find the problem and recommend solutions.
 Lets Start

Problem: Steel manufacturer is facing reduced profits. You have been

hired to find the problem and recommend solutions.

Preliminary
Questions?
 Lets Start

Problem: Steel manufacturer is facing reduced profits. You have been

hired to find the problem and recommend solutions.

Preliminary
Questions?
Company
Competition
Product
Customer
 Lets Start

Problem: Steel manufacturer is facing reduced profits. You have been

hired to find the problem and recommend solutions.

Preliminary
Questions?
Company 1. Company specific/ Industry wide?
2. Location
Competition 3. Reputation of company
Product 4. Value chain?
Customer 5. Competitors?
6. Customer segmentation?
7. Problem since when?
 Lets Start

Problem: Steel manufacturer is facing reduced profits. You have been

hired to find the problem and recommend solutions.

Preliminary
Questions?
Company
Revenue
Competition
or Cost?
Product
Customer
Revenue?

Revenue Tonnage of sold

steel
Streams? By-products
(energy)
 Revenue?

Revenue Tonnage of sold

steel
Streams? By-products
(energy)

# units sold Price per unit

 Cost?

Cost Value chain?

Streams?
 Cost?

Cost Value chain?

Streams?

Cost of Cost of Cost of

production distribution marketing
 Cost?

Cost Value chain?

Streams?

Cost of Cost of Cost of

production distribution marketing

Fixed Variable
Initial infrastructure, Electricity, raw materials, etc
land, maintenance, etc
 Cost?

Cost Value chain?

Streams?

Cost of Cost of Cost of

production distribution marketing

Transportation Incentive to
retailer
 Cost?

Cost Value chain?

Streams?

Cost of Cost of Cost of

production distribution marketing

Transportation Incentive to
Value retailer
Chain?
 Transportation

Start ? Route ? End ?

 Transportation

Start ? Route ? End ?

Mode of transport, lease (try Shortest? Capacity of What about the vessel on
another vendor/ start your carrier, etc return? Labor to deload the
own), labor to transfer from steel, etc
factory to pickup, etc

Transportation cost = Fixed cost + Variable (Fuel + Maintenances + Toll

+ Drivers)
Compare self with cartel price.
 Recommendation

Start own transportation channel rather than leasing out.

Market Entry Framework
Conventional questions for market entry case -

Tip - Never ask all questions straight in the beginning of the case. Only the basic ones !
Remaining questions should be asked on need to know basis as you proceed through the case .
Basic structure for market entry case -

Market Entry

Quantitative
Qualitative Analysis
Analysis
Basic structure for market entry case -

Market Entry

Quantitative
Qualitative Analysis
Analysis

Estimate Market Size

Estimate Market
Share

Estimate Profits

Cost (Fixed
Revenue
and Variable)

Breakeven
point
Basic structure for market entry case -

Market Entry

Quantitative
Qualitative Analysis
Analysis

Value Chain
Estimate Market Size Customers Feasibility

Estimate Market Competition/ Supplier/ Buyer

Share Substitutes Concentration

Estimate Profits Entry Barriers

Cost (Fixed
Revenue
and Variable)

Breakeven
point
Level 2 Structure - Market entry case -
Value Chain
Feasibility

Production Marketing
Challenges Distribution Challenges
Challenges

Capital Investment Production Capacity

Resource
Availiabilty

Equipments/
Labor
Input content
Sample Case
The client is a German Electronics company. They have developed a solar
lantern. They have hired us to figure out whether they should enter the market
in India.
Sample Case
The client is a German Electronics company. They have developed a solar
lantern. They have hired us to figure out whether they should enter the market
in India.
General Preliminary Questions -

1) First you can make the most basic segregation - Quantitative vs Qualitative !
2) What metric should we use to judge whether we should enter the market? Profits?
3) Is there any other underlying objective that should be taken care of ?

Specific Preliminary Questions -

4) What parts of the value chain do we operate in?

5) What geography within India we are looking to enter?
6) What exactly is the product ?
7) How does the product work?
8) Regarding Competition - Major players in market
Initial structure to solve the case -

Market Entry

Quantitative
Analysis Qualitative Analysis

Estimate Estimate
Profit per Unit
Market Size Market Share

Value Chain
Customers Feasibility

Competition/ Supplier/ Buyer

Substitutes Concentration

Entry Barriers
Lets start with market size !

100%

50%

0%

37.5 million approx

Alway keep looking for acknowledgement from the interviewer so that you know youre on the right track !
Market Share
It depends on various parameters specific to case !

What are the alternatives available ?

We need to compare all the parameters given below with our competitors and substitutes.

1) Price
2) Lifespan of product
3) Illumination

Considering all the factor you will reach a market share say 30% of initial (40% lost to cheap
clones and 30% lost to other competitors)

Number doesnt matter - only thought process and factors considered do !

Finally calculating profits-
Cost

Ask for the data on fixed and variable cost -

You can also specifically ask for these sub parts in variable cost !

Manufacturing cost ?
Logistics cost ?
Distribution cost ?
Marketing etc .?

Revenue
Revenue = Market Size * Market Share * Price/unit

Profits
Profits = Revenue - Cost (as life span of product may be 2-3 years, so these profits will be
assumes in 2-3 years time )
Business insights - Qualitative part
Value chain feasibilty

Production Marketing
Challenges Distribution Challenges
Challenges

Capital Investment Production Capacity

You can ask about Entry Barriers !

You can ask about supplier-buyer concentration !

Conclusion
It should be crisp and to the point !
Possible conclusion -