2282016 1 Meeting Agenda Brief review of last meeting Market size estimation Mental math tips and practicing Business situation framework Skills for today Business situation framework 4 Cs ID: 781671
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Slide1
Case Practicing
Duke APD Consulting Club
2/28/2016
1
Slide2Meeting Agenda
Brief review of last meeting
Market size estimationMental math tips and practicingBusiness situation frameworkSkills for today:Business situation framework (4 C’s)BCG Matrix (product protfolio matrix)
Case practice2/28/2016
2
Slide3Meeting Agenda
Brief review of last meeting
Market size estimationMental math tips and practicingBusiness situation frameworkSkills for today:Business situation framework (4 C’s)
BCG Matrix (product
protfolio
matrix)
Case practice
3/1/2016
3
Slide4Three steps for market size estimation
Determine and label the question, and lay out the structure:
population-based, household, or preposterous question? Make assumptions:The total population/ the total household
/ the total area of the U.S….Do calculation:Be accurate enough
but not necessarily to be precise
2/28/2016
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Slide5Summary for market size estimation
Key numbers to keep in mind:U.S. population is 320 million
Life expectancy of an American is 80 yearsEven distribution between the ages (so there is the same number of 2-year-olds as 72-year-olds. We100 million U.S. households2/28/2016
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CASE IN POINT: Complete Case Interview Preparation, 8th Edition
Slide6Sample estimation
A man lives on a small hill, and he has to walk down the hill to take a bus to work every day.
Question: the slope of the ramp from his home to the bus stop?2/29/20166
Slide7Sample estimation
Solution 1:1, Since this man has to walk down the hill, the slope should be negative.
2, Not considering special circumstances, the bus can’t drive up to the hill, the absolute value should not be very low, let’s say higher than 30 degrees.3, This man can still walk down and up, the absolute value of the slope should not be very high, let’s say lower than 45 degrees.4, Our estimation is: -30 to -45 degrees. Take a midpoint mark, -37 degree.
2/29/2016
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Slide8Sample estimation
Solution 2:Well it’s hard to estimate the slope because of lack of information. But I can tell you how to estimate.
Suppose this man is very, very fat, like a 500 lbs ball. We can just crouch at his door and watch him walk to the bus stop every day, until he falls off one day. If he rolls down the hill at a constant speed, and we know the friction of the ground, then we can know the slope!
2/29/2016
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Slide9Meeting Agenda
Brief review of last meeting
Market size estimationMental math tips and practicingBusiness situation frameworkSkills for today:Business situation framework (4 C’s)
BCG Matrix (product
protfolio
matrix)
Case practice
3/1/2016
9
Slide10Mental math
Tips:First,
match the digits, and ignore the third digit from left and the rest after thatSecond, for plus and minus questions, do calculation on the highest two digitsSecond’, for multiply questions, round up or round down, and keep in mind how many zeros should be there; for dividing questions, after rounding up or down, cancel out the zeros, and put it into this form: XXX/XThird, do the calculation and don’t forget to put zeros afterwards.
2/29/2016
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Slide11Mental math practice
2/28/2016
11Mental math practice: (1 min, error should be controlled under 20%)
Slide12Meeting Agenda
Brief review of last meeting
Market size estimationMental math tips and practicingBusiness situation frameworkSkills for today:
Business situation framework (4 C’s)BCG Matrix (product
protfolio
matrix)
Case practice
3/1/2016
12
Slide13Market situation framework
2/28/2016
13 Nature of product
Commodity of differentiable good
Identify complementary goods
Identify substitutes
Products life cycle
packaging
Capabilities and expertise
Distribution channels
Cost structure
Investment cost
Intangibles
Financial situation
Organizational structure
Competitor market share concentration
Competitor behaviors
Best practices
Barriers to entry
Supplier concentration
Regulatory environment
Who is the customer
What does each customer segment want
Price sensitivity
Distribution channel preference by segment
Customer concentration and power
Customer
Competitor
Company
Product
Slide14Introduction to Case Practice series
Items to cover:
Mental math,
Market size estimation,
Case interview frameworks,
Basic case interview skills,
Case practice with peers
2/28/2016
14
Slide15Meeting Agenda
Brief review of last meeting
Market size estimationMental math tips and practicingBusiness situation frameworkSkills for today:Business situation framework (4 C’s)
BCG Matrix (product
protfolio
matrix)
Case practice
3/1/2016
15
Slide16Business situation (4C’s)
4C’s framework:Consumers/customers
CompanyCompetitorCollaborator2/29/2016
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Slide17Business situation (4C’s)
Consumers/customers:
Consumers and customers can be two different entities. Identifying and meeting the needs of both entities are crucial.Consumers: people who consume the productCustomers: people who buy the product
Define the market:Decision making unit:
Who’s the consumer and customer? Who makes the choices? Who influences the choices? Who pays for the product?
Decision making process:
what triggers the needs?
Product use: how much? How often? When, where, and with whom?
Product nature: salient aspect? Meet or exceed expectations?
Situational factors:
Purchase occasion? 1
st
time? Customer loyalty? Existing of alternatives?
2/29/2016
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Harvard Business School Management Consulting Club, Case Interview Guide
Slide18Business situation (4C’s)
Company:
Internal analysis:
Key Success Factors (KSFs): Can be operational factors: product mix, inventory turnover,
competitive standing: customer loyalty, trend setter,
organizational structure: management structure, highly-skilled labor
Value Chain:
Raw Materials >>> Operations >>> Delivery >>> Marketing & Sales >>>Services (customer retention)
Financial Analysis:
Balance sheet, financial ratios, cash flow analysis, time value of money, net present value, cost accounting
External analysis
:
3/1/2016
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Harvard Business School Management Consulting Club, Case Interview Guide
Slide19Business situation (4C’s)
Company:
Internal analysis:External Analysis:General trends:Supply/demand, demographics, socio-cultural, political forces, technology, macroeconomics/globalIndustry analysis:
Industry evolution, fragmented industry, emerging industry, maturing industry, declining industry
3/1/2016
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Harvard Business School Management Consulting Club, Case Interview Guide
Slide20Business situation (4C’s)
Competitors:
Competitive analysis:What drives the competitor: future goals (at all levels of management), assumptions (held about itself and the industry)What is the competitor doing and what can the competitor do:
current strategy,
capabilities (strengths and weaknesses)
Market signals:
prior announcement, or after the facts,
discussion of the industry, or competitors historical relationship
Competitive moves:
risks, retaliation…
3/1/2016
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Harvard Business School Management Consulting Club, Case Interview Guide
Slide21Business situation (4C’s)
Collaborators:
strategies to deal with suppliers and distributorsBuyers selection:Four broad criteria to determine the quality of a buyerPurchasing potential
Growth potentialStructural position: intrinsic bargaining power and propensity to use it
Cost of servicing
Good buyers can be created through:
Build up switching costs (discounts or loyalty program)
High-cost buyers should be eliminated
Supplier strategy:
3/1/2016
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Harvard Business School Management Consulting Club, Case Interview Guide
Slide22Business situation (4C’s)
Collaborators:
strategies to deal with suppliers and distributorsBuyers selection:Supplier strategy:Stability and competitiveness of the supplier poolOptimal degree of vertical integration
Allocation of purchases among qualified suppliers
Creation of maximum leverage with chosen suppliers – avoid switching cost, threat of backward integration
3/1/2016
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Harvard Business School Management Consulting Club, Case Interview Guide
Slide23Meeting Agenda
Brief review of last meeting
Market size estimationMental math tips and practicingBusiness situation frameworkSkills for today:
Business situation framework (4 C’s)BCG Matrix (product protfolio matrix)
Case practice
3/1/2016
23
Slide24Bcg matrix
“Product Portfolio Matrix”
To be successful, a company should have a portfolio of products with different growth rates and different market shares. High growth rate product needs more cash inputs to grow, while low growth rate product functions as earning excess cash.3/1/2016
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case in point 8
th
edition, 5: ADDITIONAL TOOLS AND FRAMEWORKS
Slide25Bcg matrix
Four rules determine the cash flow:
margins and cash generated are a function of market share. High margins and high market share go together;growth requires cash input. The added cash required to hold market share is a function of growth rates;high market share must be earned or bought;
no product market can grow indefinitely. The payoff from growth must come when the growth slows. The payoff is cash that cannot be reinvested in that product.
3/1/2016
25
case in point 8
th
edition, 5: ADDITIONAL TOOLS AND FRAMEWORKS
Slide26Bcg
matrix
Four sections in the MatrixLow growth, high market share: Cash Cows
, generate excess cashLow growth, low market share: Cash Pets, may show some accounting profit, but the profit must be reinvested to maintain the share, worthless.
High growth, low market share:
Question mark
. Require far more cash than they can generate. It’s a liability of a company unless it becomes a leader.
High growth, high market share:
The star
. It’s the leader of the industry, and if it can stay as a leader, when the growth slows down it will eventually become the Cash cow.
3/1/2016
26
case in point 8
th
edition, 5: ADDITIONAL TOOLS AND FRAMEWORKS
Slide27Bcg matrix
3/1/2016
27
case in point 8
th
edition, 5: ADDITIONAL TOOLS AND FRAMEWORKS
Slide28Meeting Agenda
Brief review of last meeting
Market size estimationMental math tips and practicingBusiness situation frameworkSkills for today:
Business situation framework (4 C’s)
BCG Matrix (product
protfolio
matrix)
Case practice
3/1/2016
28
Slide29Case Practicing
2/28/2016
29