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Management Consulting Case Study Template

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 you’ll 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 situations in our later examples should do.

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 don’t be shy about referencing them as you dive into the specifics of the Case Study you’re evaluating.

Porter’s Five Forces

Porter’s Five Forces has become an incredibly well known framework in the business strategy world. It is probably the most famous of all of them. It was introduced by Harvard Professor and Monitor Consulting firm founder Michael Porter.  Porter’s 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 some of the components found in this framework.

Here are the Five Forces in detail:

Porter’s Five Forces

  1. Threat of New Entrants (effectively, this is “Barriers to Entry”)
    1. Legal or regulatory barriers (for example, patents or government contracts)
    2. Economies of scale
    3. Cost advantage (for example, unique access to lower raw material costs)
    4. Access to distribution channels
    5. Product differentiation (for example, how is this product different?)
  2. Competitive Dynamics
    1. Industry growth rate
    2. Industry fragmentation
    3. Level of switching costs
    4. Motivation to reduce prices (for example, from excess capacity)
  3. Supplier Power
    1. Level of substitute products
    2. Buyer’s decision influenced by supplier
    3. Supplier inputs/products have high switching costs
    4. Supplier has potential to forward integrate
    5. Supplier accounts for large share of the inputs/products
  4. Buyer Power
    1. High customer/client concentration
    2. Level of commoditization of product/input
    3. Level of switching costs for buyer
    4. Buyer has significant product/market information
  5. Threat of Substitutes
    1. Substitute products/services that can compete on price and/or quality
    2. Switching costs to shift to substitute products

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 Porter’s Five Forces above, you will see that there is substantial overlap.

The “3 Cs” approach is to address any Case situation by assessing the:

  1. Company
  2. Competitors
  3. Customers/clients

The 3 C’s

  1. Company: the first C is about understanding the operations of the Company itself and how the Company makes money.
    • Product/service offering
      • Pros and cons of product/service
      • Value chain
    • Profitability analysis
      • Revenue (price × volume) and expenses
    • Other Company factors
      • Capacity
      • Core competencies
      • Regulatory environment
      • Distribution network
      • Management and core employees
      • Other
  2. Competition: the second C is about understanding how the competitors impact your client and how the competitive dynamics will change over time.
    • Competitor mix/make-up
      • Market share
      • Fragmentation
      • Financial situation (for example, deep pocket competitors?)
      • Management
      • Other competencies (for example, marketing or distribution channels)
    • Competitor products/services
      • Value proposition versus client
      • Value chain
  3. Customers/Clients: the third C is often overlooked but is fundamental, and consists of knowing your clients/customers. Always ask for available customer information, as knowing what your customer wants/needs is important to winning in business.
    • Customer mix
      • Demographics (age, gender, etc.)
      • Value of core customers/clients
      • Wants and needs of customers/clients
    • Position with customer/client segments
      • Customer/client segment sizes
      • Customer/client segment shares
      • Customer/client segment growth rate
    • Key drivers of customer/client decisions
      • Price
      • Product characteristics
      • Brand
      • Personnel (especially for B2B)

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, you’ll develop a better sense of when and how to draw from these frameworks.

The “4 Ps” approach is to address a marketing-oriented Case situation by assessing the:

  1. Product
  2. Price
  3. Promotion
  4. Placement

The 4 P’s

  1. Product: it is critical to understand the Company’s product/service and its value proposition.
    • Company product/service qualities, features, attributes
      • Commoditized or differentiated?
    • Competitor product/service qualities, features, attributes
      • Commoditized or differentiated?
    • Substitute product options
      • How close are the substitutes?
      • Value proposition versus substitutes (price, quality, etc.)
      • Switching costs
    • Customer value proposition
      • Why are clients/customers purchasing the product?
      • Brand, availability, service, value, reliability, aesthetic, etc.
  2. Price: it is critical to understand the Company’s 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
      • Is our product sufficiently better to justify a higher price? Or is it somewhat commoditized?
      • Customer loyalty/lock-in
      • Supply/demand: current state of demand and supply for the product or service
    • Price of substitute products/services
    • Price of competitor products/services
    • Market positioning
      • Brand position and perception
      • 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 Company does so.
    • Which distribution channels to use?
      • Select/exclusive channels or wide distribution network?
    • Transport/logistics
      • Seamless delivery to customers
      • Internal transport or outsource?
    • Specific location within the channels
      • Specific areas of a site online
      • Product placement in stores
  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.
    • Which markets/customers should the Company target?
      • Customer/client awareness
    • Is the Company reaching and attracting its target market?
    • What are the most effective marketing campaign strategies?
    • Return on marketing spend
    • Are we retaining our customers/clients?
    • Can we up-sell or cross-sell to our current customers/clients?

SWOT (Strengths, Weaknesses, Opportunities, Threats)

SWOT analysis is more of a mini-framework, specifically for quickly evaluating a single company in an industry. In that regard, it’s 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 should be prepared to apply it in that case.

SWOT is effectively a quick, high-level market landscape/competitive dynamics analysis arranged using the following terminology:

SWOT Analysis

  1. Strengths: Company strengths within an industry
  2. Weaknesses: Company weaknesses within an industry
  3. Opportunities: Company opportunities available within the industry (or potentially by branching into a new industry)
  4. Threats: Company threats within the industry (or potentially from companies whose primary business is in another, related industry, or from disruptive technologies that potentially threaten all companies in an industry)

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 entire airline industry against the broad transportation sector.

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 common Case Study interview question types.

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 yourself with the basics of them:

Additional Analysis Concepts

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
  • Fixed vs. Variable Expenses
  • Net Profit Margin
  • Return on Investment (ROI)
  • Compound Annual Growth Rate (CAGR)
  • Lifetime Customer Value (LCV; sometimes referred to as “User Lifetime Value”)
  • Product Life Cycle
  • Opportunity Cost
  • Elasticity (Supply or Demand)
  • Financial Statements, Accounting, and Valuation

Let’s take a deeper look at each analysis category.

Break-Even Analysis

  • The gist of Break-Even Analysis cases is that the Fixed Costs of a business—i.e., the costs that are unavoidable—need to be overcome by making profit from sales of products. 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 order to overcome my Fixed Costs, i.e., to ‘Break Even’?”
  • In other words, the Break-Even Point is the number of units sold at which Revenue equals Total Expenses (Fixed Expenses plus Variable Expenses).
  • 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 price products and service and the number of units to produce.
  • Formulaically, Break-Even Number of Units = Fixed expenses ÷ (Revenue per unit – Variable Expenses per unit).
  • Note that the expression (Revenue per unit – Variable Expenses per unit) is often referred to as the Unit Contribution Margin.
  • An understanding of how to analyze Expenses and differentiate Fixed Expenses from Variable Expenses is useful in order to run a Break-Even Analysis of a company.
  • 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 Consulting Case Study interviews.
  • 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.

Fixed vs. Variable Expenses

  • Fixed Expenses (or Fixed Costs) are expenses that do typically fluctuate regardless of the 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 Payments, and Corporate Overhead Expenses.
  • 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 benefits), and delivery costs.
  • Understanding a Company’s Fixed vs. Variable Cost structure is important in a variety of cases (such as in Break-Even Analysis, discussed above).
  • 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.
  • Variable Expenses, meanwhile, rise proportionately as volume increases, so Variable Expenses per unit remain constant.

Net Profit Margin

  • When an interviewer asks a candidate to calculate the Net Profit Margin (a.k.a. Profit 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, a.k.a. EBIT, or EBITDA) as a percentage of Revenue.

Return on Investment (ROI)

  • Return on Investment (ROI) is a ratio that determines the return, or Profit, from capital invested. ROI is used in consulting interviews as a way to evaluate the return of a particular investment or to assess the feasibility of a potential investment or acquisition. Many companies have an internal ROI metric for capital investments.
  • 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 typical for an ROI calculation.

Compound Annual Growth Rate (CAGR)

  • The Compound Annual Growth Rate (CAGR) is the percentage rate at which any figure, 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 same growth rate every year.)
  • 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 2012, what is the CAGR?
    • Answer: [(2,100 ÷ 1,000)^(1 ÷ 11)] – 1 = 2.1^(0.090909) = 7.0%
    • Thus, the CAGR between 2001 and 2012 was 7.0%.
  • 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 rate equals 72.
    • 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!

Lifetime Customer Value (LCV)

  • Lifetime Customer Value (LCV) projects the total profitability attributed to a firm’s future relationship to a typical customer.
  • 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 customer, plus growth opportunities.)
  • The steps to calculate the LCV are as follows:
    • Estimate the remaining customer years; in other words, how long is a typical customer expected to last with the company?
    • 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 out or allocating them on a per-customer basis)
    • Calculate the Net Present Value of the future profit (Revenue – Expenses) per customer (in other words, discount these future profits back into today’s equivalent dollars)

Product Life Cycle

  • Important for market sizing problems, the Product Life Cycle helps to calculate and project the annual market size for a given market/industry. It is often used by companies to project their own anticipated Revenue figures.
  • 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 average number of years a car is driven.
  • It is also worth knowing the four steps in the Product Life Cycle Curve, as the concept could come up in a hypothetical product case.
    • Emerging: A new product or technology that is in initial adoption phases and therefore has very rapid growth rates (for example: electric cars)
    • Growth: Product adoption is becoming widespread but still growing at an above-average rate (for example: smartphones)
    • Maturity: Product adoption is widespread, or at least stabilized; growth typically comes only from price increases and growth in GDP (for example: breakfast cereal)
    • Declining: Technological obsolescence, shifting consumption patterns, or increased market competition has resulted in total growth rates that are below-average or negative (for example: dairy products or wireline telephones)

Opportunity Cost

  • Opportunity Cost simply refers to the concept that if a person or company does X, the person or company necessarily cannot also do Y.  This is an important concept throughout business and consumer decision making, as there are only finite resources available in most cases (time, money, etc.).
  • 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.

Elasticity (Supply or Demand)

  • Elasticity is a concept from microeconomics that describes the tradeoff between Quantity and Price.
  • Specifically, Elasticity is the ratio of a percentage change in quantity to the percentage change in price. Formulaically, Elasticity = % Change in Quantity Demanded or Supplied ÷ % 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 decrease in product sold).

Financial Statements, Accounting and Valuation

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 Discounted Cash Flow valuation, for example.

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 Case Study interview question.)

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 with the components of basic Financial Statements:

  • Income Statement (Revenue, Expenses, and Profit)
  • Balance Sheet (Assets, Liabilities, and Equity)
  • Statement of Cash Flows (Cash Flows broken out into the following categories of sources: Operating Activities, Investing Activities and Financing Activities)

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—particularly when it comes to Corporate Valuation.)

←Consulting Case Study Interview: OverviewConsulting Case Study Types→

In the previous chapter, we described some well-known frameworks for evaluating companies and industries—frameworks that are important in Management Consulting Case Studies, and can broadly be applied to many different types of Consulting Business Situation Cases. We also described a number of analytical techniques that frequently come up in Business Situation Cases. In this chapter we’ll take a deeper look into common types of Business Situation Cases, evaluating the core concepts in them and the methodologies for approaching them (using ideas from the frameworks from the previous chapter to help us organize our approach, and the analytical techniques from the previous chapter to help us drive to an answer).

Each of these Case Study categories occurs very frequently in Management Consulting Case Study interviews, so you should be familiar with the basic issues that tend to occur over and over when they come up. In short, you should practice each of these Case types multiple times until you feel confident that you could a new Case of this type in a live interview.

Here are the eight primary types of Business Situation Case Studies as we see them:

  • Profitability Optimization
  • Pricing Optimization
  • Industry Landscape & Competitor Dynamics
  • New Product or Project
  • Growth Plan/Strategy
  • Market Entry or Expansion
  • Merger/Acquisition/Joint Venture
  • Start-Up/Early-Stage Venture

Note that in most situations, a given Case will lend itself to several different categories. In the discussion below, we will attempt to enumerate the different combinations of Case Study situations that tend to occur together in the same Case.

Profitability Optimization

In both good and bad economies, companies continually seek to optimize their Revenue model and their Cost structure.  The goal, ultimately, is for the company to use Invested Capital as efficiently as possible.

The two core components of a Profitability Optimization case are a Cost Assessment and a Revenue Assessment. Sometimes, only one of the two will be required for the Case. Note that Profitability Optimization situations often arise as part of a Case Study of another type—for example, in a Case Study involving pressures from competitors or substitute products, you may need to assess and optimize the Company’s Cost structure to determine it is competitive. Or, it could be that the case revolves around the Company’s Cost structure optimization, the job candidate may need to perform some qualitative analysis of the competitor or supplier landscape.  As you can see, a variation on Profitability Optimization can arise as part of many different Business Situation Cases.

Whenever Profitability Optimization is a key issue, the interviewer will usually highlight that profitability has been declining (or is projected to decline) and the Case will involve identifying the sources of the decline and potentially how to reverse or obviate it.

Example Case Situations

  • The client is a low-cost airline based in Singapore, serving 24 destinations in the Southeast Asian market.  The Airline’s profitability was strong until 2010 and has since seen a declining trend and is now only just barely profitable.  The CEO would like you to determine what is causing the profitability decline and suggest a strategy to reverse this trend.
  • The client is a market-leading, niche ski equipment manufacturer based in Colorado. Profitability has remained steady but the CEO has noticed from reading industry annual reports that two publicly-listed competing ski equipment manufacturers have meaningfully higher profit margins and have also been increasing their top line (Revenue). The CEO would like to understand the drivers of these differences.

Note that both of these Cases would involve some degree of Market Landscape/Competitor Dynamics analysis in addition to Profitability Optimization.

Core Concepts and Structure

Scenario: The client has determined that profitability margins have been (or are projected to be declining) and has requested that you analyze the causes of this decline and put forth recommendations to reverse it.

Expense Analysis

  • Gather current expense breakdown and historical expense breakdown (this question alone will only help to get you towards the key focus area, as the interviewer will only have so much information).
  • Identify the “bang” areas (this is Consultant lingo for expense areas that account for a large percent of the total).
  • Analyze the key Fixed and Variable expense components and identify any meaningful changes in expense areas.
    • Fixed Expenses might include overhead, fixed equipment expenses or depreciation, distribution, rent, and/or interest
    • Variable Expenses might include raw materials, labor, sales, and/or distribution costs
  • Request information on competitor Cost structures from the interviewer to see where the company’s Cost structure may be inefficient.
  • Assess whether any expense areas could be cut with minimal or no impact on sales.

Revenue/Sales Analysis

  • Gather as detailed of information as possible on current sales volumes and pricing and historical volumes and pricing. Use this information to determine growth rates.
  • Identify the “bang” areas (consultant lingo for revenue streams that account for a large percent of the total, and/or a large percentage of the growth in the total).
  • Analyze the key product areas and identify any meaningful changes in volumes and prices.
  • Request information on competitor Revenue models (volume and pricing) from the interviewer to see where the company is potentially missing profitable business activity.
  • Assess whether any changes could be made to improve overall Revenue or Revenue per unit sold.
    • Pricing change suggestions/analysis (e.g., factors behind price elasticity; see Pricing Optimization Case descriptions below)
    • Volume assessment and ways to improve volumes
      • Identify changing customer desires/demands and respond accordingly.
      • Invest in and/or reformulate marketing strategy.
      • Expand distribution channels.
      • Expand sales force or customer service.
      • Expand production capacity.
      • Expand product/service portfolio (see New Product or Project, Growth Plan/Strategy, and Market Entry or Expansion Case descriptions below).
      • Make an acquisition or enter into a joint venture.
      • Assess which products/divisions might have the largest growth opportunities and allocate investments accordingly.

Pricing Optimization

Example Case Situations

  • What would customers be willing to pay if Facebook shifted to a subscription model (we heard that this Case was conducted by the San Francisco office of a major Consulting firm recently, though the client being analyzed was not Facebook)?
  • A long-stay hotel chain would like to maximize profitability by determining the optimal pricing for different lengths of stays and types of rooms.
  • An online movie-streaming company is seeking to select the optimal price mix for its product offering in order to maximize profitability.

Like Profitability Optimization, this is a type of Case Study in which many of the other Case Study types might be relevant (for example, Industry Landscape, Competitor Dynamics, Growth Plan/Strategy, etc.)

Core Concepts and Structure

Scenario: The clientis deciding how to set prices so as to maximize profitability.

  • Competitor/substitute pricing is the key element here—particularly if there is no major differentiation or benefit to the client’s products relative to substitutes.
    • Price of substitute products/services
    • Is the product sufficiently different to justify a higher price? (This points to the threat of substitutes.)
    • Customer loyalty/lock-in (as an example: many lower-priced colas have failed to successfully compete against Coca-Cola due to consumer brand loyalty)
    • Remember to ask about: Price Elasticity, Price Elasticity, Price Elasticity!
      • Interviewers will often give you sufficient information to assess the impact on volume with a price adjustment and expect you to make the calculation.
      • The higher the absolute value of Demand Elasticity (i.e., the more volume decreases when prices increase), the more likely it is that a price reduction would be beneficial. Likewise, the lower the absolute value of Demand Elasticity (i.e., volume barely decreases when prices increase), the more likely it is that a price increase would be beneficial.
  • Expense-driven pricing analysis
    • What is the fully-loaded cost for the client to produce the product or offer the service? How does this compare to the price?
    • How does client’s fully-loaded cost compare with competitor pricing?
    • Note: In situations in which the client’s cost is higher than the competitor price, it is usually a good recommendation to exit this product or service unless it can be demonstrated that:
      • There is a clear path to reduce client production costs, or
      • The competitor price is temporary and unsustainable.
  • Customer-driven pricing analysis
    • How much would customers be willing to pay for this product?  (You are not expected to be able to answer such questions, but ideas on how you might approach such questions are important—for example, running a survey, looking at applicable Case examples, looking at pricing structures for comparable products, etc.)
    • What is the current state of demand and supply for the product or service (for example: would an increase in the number of orange juice manufacturers and orange tree groves be putting significant pressure on orange juice prices)?
    • What are the alternatives for the customer and the relevant prices? I.e., is the threat of substitutes substantial or can it be mitigated?

Industry Landscape & Competitor Dynamics

Example Case Situations

  • A client is a large nutrition, health & wellness Company and is considering divesting its non-core infant foods subsidiary in order to free up capital to invest in higher growing industries.  The CEO would like you to assess the industry landscape of the infant foods business in Western Europe.
  • A client is a global financial services firm that is considering allocating more resources to the facilitation of electronic fund transfers globally.  The CEO wants to better understand the market landscape and develop a strategic plan to increase the Company’s share of the market.

Core Concepts and Structure

Scenario: The client wants you to understand and assess an industry (this often overlaps with Market Entry, New Product or Project, or Growth Plan/Strategy Cases, described in more detail below).  Usually, the goal is to assess the characteristics of an industry and to determine whether or not it is an attractive industry to enter, to ramp up, or potentially to exit.

  • Market/Industry Landscape
    • Current market size
    • Projected market growth
    • Customer mix (a.k.a. Customer Segmentation)
    • Industry-wide profitability
    • Mergers & Acquisitions activity in the industry
    • Competitive Advantage/Barriers to Entry
    • Supply chain: who are the key suppliers to the industry? (Assess this only if relevant)
    • Brand loyalty
    • Technology, regulatory issues, or other key topics relevant to the market
  • Competitor Dynamics
    • Key competitors in the market and their strategies
    • Current market shares and shares over time
      • Used to derive Market Concentration (i.e., what portion of the market is served by the top 3/5/10 companies in the market?)
    • Product/service differences among competitors
    • Any recent moves/threats by a key player to the market or a new entrant?

New Product or Project

Example Case Situations

  • A client is a durable consumer equipment manufacturer attempting to develop a “green” washing machine that employs special technology, resulting in 60% less water use and cleaning 10% more effectively than standard washing machines.  The CEO would like help to determine the product’s market potential and the strategy to bring it to market.
  • A client is a pharmaceutical company that is engaged in Research & Development on a drug that would both lower cholesterol and reduce obesity (i.e., help in significant weight loss).  The CEO would like to know whether this drug would gain traction, and if so, what is the potential market size and the optimal price for such a drug.

Once again, this is a type of Case Study where many of the other Case categories might be relevant (Industry Landscape, Competitor Dynamics, Growth Plan/Strategy, Market Entry or Expansion, etc.). Note that such cases could also involve decisions such as the purchase of a major information technology system (in this case, many of the acquisition concepts could be applied).  It could also involve the assessment of a new investment project, such as the development of a new major manufacturing or sales facility.

Core Concepts and Structure

Scenario:The client is developing a new product and would like your assessment of the feasibility of this product. Would the product be profitable and beneficial in the marketplace?

  • Product Snapshot (Less relevant for New Project cases)
    • Will the client have any competitive advantage that prevents competitor entry (such as a patent or a way to lock in customers) once the client has unveiled the new product?
    • How is the client’s product different from and/or better than competing products? What are the substitute products?
    • Pros and cons of client product (for example, environmental and social considerations)
    • Is there a risk that that the new product will cannibalize another of the client’s products?
  • Customer Strategy (Less relevant for New Project cases)
    • What is the appropriate customer mix to target? How does this affect profitability and marketing strategy?
    • What are the distribution channels? Can the client use its existing distribution channels?
    • What is the methodology/strategy to attract customers to try the product and potentially switch?
    • What is the methodology/strategy to retain newly acquired customers?
  • Market Entry Strategy (Mostly less relevant for New Project cases)
    • Competitive advantages/Barriers to Entry
    • Approach to entering (Acquisition or enter organically?)
    • Time/investment required to enter market
    • Product pricing strategy
    • Technology, regulatory or other risks to entering this market
  • Market Landscape
    • Current market size
    • Future market growth
    • Current customer and product mix
    • Key competitors in the market, their strategy, Market Shares (current and historically over time), product differences and potential response to client’s actions
  • Product/Project Funding
    • Does the projected profit justify the required the Research and Development expenditure, the initial capital requirements, and any ongoing investment needs?
    • What is the Opportunity Cost of the required funding?
    • What is the required financing and how is the Research & Development being financed?
    • Will the project result in Economies of Scale (i.e., cost reductions for increased production) elsewhere in the company? (Less relevant for New Product cases)

Growth Plan/Strategy

Example Case Situations

  • The client is a German carpet manufacturer that has seen sales decline dramatically in its North American operation.  The client would like you to help it develop a strategic plan for sales growth in North America and to determine the root causes of the sales decline.
  • The client is a surf apparel Company that has three stores on the West Coast of the United States and is looking to grow its store base significantly across the continent.  The CEO would like help designing a store rollout strategy across North America.

Yet again, this is a type of Case Study where many of the other Case categories might be relevant (Industry Landscape, Competitor Dynamics, New Product or Project, Market Entry or Expansion, etc.)

Core Concepts and Structure

Scenario: The clientis seeking to grow its business, whether it involves growing a certain product’s sales, growing in a certain geographical region, increasing total sales, etc.

  • Increasing Revenue (this is the heart and soul of most Growth Plan/Strategy Cases)
    • Ways to increase number of units sold
    • Optimize prices (See description of Pricing Optimization above)
    • Increase share of wallet (fancy term used by Consultants to mean that the client captures more of a typical customer’s spending in a particular area than it previously did; analogous to Market Share)
    • Determine which products/divisions have the largest growth opportunities and allocate investments accordingly
  • Growth Drivers (approaches to growth and factors that influence capacity for growth)
    • Identify changing customer preferences/demands and respond accordingly
    • Invest in and/or reformulate marketing strategy
    • Investigate means and requirements to expand distribution channels
    • Investigate means and requirements to expand capacity
    • Investigate means and requirements to expand sales force / customer service
    • Investigate means and requirements to expand product/service portfolio (see description of Market Entry or Expansion below)
    • Make an acquisition or enter into a joint venture (see description of Merger/Acquisition/Joint Venture below)
  • Always drive towards Profitable Growth: in any growth case, be sure to discuss this issue. Growing Revenue in and of itself is usually not a good outcome if the Costs of the growth exceed the Revenue, or if there were other growth opportunities that would have yielded a higher return on investment but are mutually exclusive (see Opportunity Cost).

Market Entry or Expansion

Example Case Situations

  • The client is an online yoga apparel retailer looking to enter the European market. The CEO would like help in formulating an entry strategy.
  • A high-end watch manufacturer has developed a high quality watch called the “outdoors” watch in order to attract the wealthy, younger audience.  The CEO would like to develop a strategy to attract this customer segment.

This category of Case Study frequently overlaps with several other Case categories (Industry Landscape, Competitor Dynamics, New Product or Project, Growth Plan/Strategy, etc.)

Core Concepts and Structure

Scenario: A client is seeking to expand or enter into a new market, whether it be a new geographical region or an additional customer segment.

  • Market/Industry Landscape
    • Current market size
    • Future market growth
    • Customer mix (a.k.a. Customer Segmentation)
    • Industry-wide profitability
    • Mergers & Acquisitions activity in the industry
    • Competitive advantage/Barriers to Entry
    • Supply chain: who are the key suppliers to the industry? (Assess this only if relevant)
    • Brand loyalty
    • Technology, regulatory issues, or other key topics relevant to the market
  • Competitor Dynamics
    • Key competitors in the market and their strategies
    • Current market shares and shares over time
      • Used to derive Market Concentration (i.e., what portion of the market is served by the top 3/5/10 companies in the market?)
    • Product/service differences among competitors
    • Any recent moves/threats by a key player to the market or a new entrant?
  • Entry Strategy
    • Approach to entering (acquisition or enter organically?)
    • Time/investment required to enter market
    • Customer mix/segmentation
    • Product pricing strategy

Merger/Acquisition/Joint Venture

Example Case Situations

  • Your client is a European online white goods retailer that is considering acquiring a North American online furniture retailer.
  • Your client is a U.S. specialty chemical producer that is considering acquiring a regional specialty chemical producer in Indonesia.

As you might expect by now, this is a type of case where many of the other case segments are relevant. In particular, Merger/Acquisition/JV activity often represents one method of implementing a Growth Plan/Strategy, a New Product or Project, or a Market Entry or Expansion.

Core Concepts and Structure

Scenario: The client is considering either acquiring a company or entering into a Joint Venture, driven by many potential factors such as wanting to increase market share, widen product portfolio, take out a potential competitive threat, etc.

Important: For this Case type, you should ask questions as to why the Company is contemplating such an action. The responses to these questions can help steer you to the right analysis, as the responses will often indicate what the key considerations behind the acquisition/JV are from the client’s perspective. Thus you should perform a standard Merger/Acquisition/JV analysis as outlined below, but then generally pivot to the right framework for analyzing the business scenario from the aforementioned categories, depending on the situation.

  • Investment Considerations in entering the Merger/Acquisition/JV agreement
    • Evaluate price to acquire (use back-of-the-envelope Valuation techniques to consider whether the deal is reasonably priced, such as those based on Comparable Company Analysis or Precedent Transaction Analysis)
    • Perform Target company-specific analysis
      • Market position
      • Customer Concentration and customer certainty
      • Supplier relationships and supplier certainty
      • Barriers to Entry
      • Reputation and brand loyalty
      • Product/regulatory/technology risks
    • Compute expected profitability resulting from acquisition
      • Pay-Back Period/Net Present Value/Internal Rate of Return based on current operations and growth estimates
      • Add in Cost or Revenue improvements from Synergies (see below)
      • Subtract out Integration and Restructuring expenses (also determine whether the project is feasible)
      • Compare with similar projections if the Company were to endeavor to grow organically (required capital expenditures, cost of marketing strategy, etc.)
    • Estimate Synergies
      • Ability to combine or leverage joint distribution channels across products produced by acquirer or target
      • Value of expending geographic/market reach
      • Cost synergies (such as spreading overhead costs across a larger combined business or combining redundant IT systems)
    • Evaluate other transaction dynamics
      • Strategic fit
      • Cultural challenges
      • Competitor response
    • Assess the medium-to-long-term plan for the acquisition
      • Plan to exit (if relevant—note that this will always be relevant for Private Equity firms)
      • Plan to restructure the organization, if any, and how/why

Start-Up/Early-Stage Venture

While consulting firms rarely work for Start-up companies due to the high fees typically charged, there are increasingly Case Study questions that discuss start-ups. Some Consulting firms have even begun the practice of working for Start-up companies and receiving equity compensation from the Start-up in exchange for reduced cash Consulting fees.

Importantly, this topic is in many ways covered when thinking about a company entering a new market or developing a new product, although there are usually some additional issues to consider for a Start-up company. (Most of these additional issues fall into the “Business Plan” category for a Start-up company.) Additionally, there is generally significant overlap with the industry landscape section.

Example Case Situations

  • Two real estate entrepreneurs are contemplating setting up a co-working space in downtown Chicago to attract the increasing number of young IT entrepreneurs in the area.  Discuss the key considerations for a business plan for such a venture.
  • Siggi, a student from Iceland at Stanford University, has determined that there is an enormous opportunity for Icelandic-style yogurt in the North American market. He is in the process of securing funding to produce the yogurt on a farm in Oregon and would like input regarding the key considerations for the yogurt to be a success.

Core Concepts and Structure

Situation: A potential client has launched a new company to develop a new product or technology that is expected to have positive yet disruptive consequences for a particular market or industry. The client would like your advice regarding specific issues in the company development or product rollout, and any thoughts regarding optimal company strategy.

  • Market Landscape
    • Competitive advantage/Barriers to Entry (with a Start-up, this is a crucial piece of the analysis—can the Start-up enter the market successfully? Will the Start-up will have some sort of competitive advantage, whether it be proprietary technology or access to particular distribution channels?)
    • Current market size (if the product a new concept, then you would typically be asked to assess the industry of a substitute product or service, or use relevant comparable products or services to estimate the potential market size for the new concept)
    • Future market growth
    • Key competitors in the market, their strategy, current market shares and shares over time, product differences and potential response to entry
    • Likely customers and customer mix (a.k.a. Customer Segmentation)
    • Industry-wide profitability (to the extent applicable)
    • Supply chain: who are the key suppliers to the industry? (Assess this only if relevant)
    • Brand loyalty
    • Technology, regulatory issues, or other key topics relevant to the product or market
  • Business Plan (the interviewer might ask you to compile a very simple business plan, after he or she gives you some information; key components are given here)
    • Product/Service
      • What is the product/service? What are pros and cons of this product/service? How does this compare to existing products on the market?
      • What will be the competitive advantage and/or barriers to entry for a product of this type?
    • Customers and Distribution
      • Who are the target customers?
      • What are the core distribution channels?
      • What is the marketing plan?
    • Financing/Profitability
      • What are the initial funding requirements prior to cash flow Break-Even? How does this compare with expected future profitability?
      • What are the projected Revenue and Costs for the next three years?
    • Management and Oversight
      • Management: experience and abilities
      • Preliminary Investors: reputation, expertise, and ability to add legitimacy to the new enterprise (and potentially invest more in the company)
      • Key Directors and Advisors

Being able to discuss the core aspects of analyzing a Start-up company highlights your ability to quickly answer questions about a new project or idea that may be thrown at you when you are with clients.

Additional Resources

There are a number of guides published and online that attempt to discuss different types of Consulting Case Study questions in a comprehensive and informative way. Our feeling is that most of them are not particularly helpful or are too expensive. There are two, however, that we have found to add quite of a bit of value as an “add-on” to the discussion above, and are therefore worth checking out. Please comment on this page or email us directly if you have a suggestion for an additional resource:

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