An Intro to Case Frameworks Johns Hopkins Business and Consulting Club January 24, 2006

Questions Why are PhDs recruited to business? As scientists, our most valuable skills reasoning and research abilities Business problems are usually much broader than those in lab We need to learn how to apply our reasoning skills to a broader context What kinds of jobs are available? http://www.jhu.edu/careers/onlinelibrary.html

The Wall Street Journal Genentech: reports earnings and peanut trial Guidant story JJ 23.2; BS 25.6, 27 New FDA Guidelines Pfizer: buys rights to Exubera worth falls Bristol Meyers

Overall Strategy Summarize the question Verify the objectives Shows you are listening, chance for correction Verify the objectives Check for multiple objectives Ask clarifying questions Company, industry, competition, product Lay out your structure

Do Not Give a monologue Ask the interviewer to repeat the question Fly through a quick answer Digress from the question at hand Use terms you do not understand Ask open-ended questions

If you are stuck… Take a moment to recap Run through the 5 C’s Company Costs Competition Consumer Clients Ask for Help!

Look out for… Graphs and charts- be ready to read them and draw them Percentages: Price Change % Change $27.00 $.54 ? $40.00 $1.00 ? $75.00 $3.00 ? $10.00 $1.70 ? $50.00 $2.50 ? Hint: Figure out 1%, then divide that into the change

Entering a New Market Your client makes shampoo. Should they enter sunscreen market too? Consider: Market Entry

Industrial Analysis Client is thinking about buying an entertainment industry and want to know about the entertainment industry. Consider: Current Industry Structure Suppliers Future

Mergers & Acquisitions Ben and Jerry’s wants to buy a cream cheese manufacturer. Should they? Consider: Objectives Price Due Diligence Exit Strategies

New Product Client has developed a new soft drink and car wash in one. What should they think about? Consider: Product Market Strategy Customers Financing

Pricing Strategies Client has developed new screenwriting software. How much should it cost? Consider: Pricing Cost-based vs price-based

Growth Strategies Client has high cash reserves. How should they use them to grow the company? Consider: Assessment Strategies

New Business Two brothers want to start a travel agency. How do they start? Consider: Market Cost/Benefit Analysis

Competitive Response Competitor has a new product that is hurting client’s sales. How to respond? Consider: Why? Strategy

Increasing Sales Client wants to become biggest seller of product. How can it? Consider: Assessment How? (volume, price, seasonal balance…)

Reducing Costs Publisher needs more cash. What costs can be cut? Consider: Assessment Internal Cost Analysis External Cost Analysis

Increasing Profits Shoe client’s sales are up but profit is flat. How can they increase profit? Consider Revenue Costs Volume

Turnaround Client is in trouble. How can you turn it around? Consider: Assess current structure Strategy- business plan, goals

Practice Case A heavy truck manufacturer with operations in Europe and the U.S. has experienced growing market share combined with declining profitability. Your client wants to know what they should outsource. What issues would you need to consider in order to make a recommendation?

Practice Case Competition Product Several competitors have begun to outsource pieces of the truck Product There are “non-viewable” components such as frame rails that are low-cost, low-tech and “viewable” components such as the cab that are high-cost and high-tech (heavy labor and material content).

Practice Case Costs: The company has invested a significant amount of money in a stamping machine for cabs. Variable Costs: Materials $300 Labor $300 Overhead $100 Depreciation $300 Total $1000 Total – Deprec. $700

Consider Amount of cost reduction Difficulty of maintaining quality control (cost of legal expenses, management time etc.) Capacity constraints of suppliers Number/ type of suppliers Brand/ quality perception of customers Proprietary process/ product?

Solution Low-cost, low-tech components should be outsourced. It would be desirable to outsource if the price to the company would be below $700. The depreciation expense is unavoidable and thus, should not be included in the decision-making process.

How many Grad Students at Hopkins Med School? Estimation Problem How many Grad Students at Hopkins Med School?

Solution Programs: 15 Large (20 students/yr) = 3 programs = 60 Med (10 students/yr) 5 programs = 50 Small (5 students yr) = 7 programs = 35 Total = 140 students/yr Avg length: 5 yrs So, 145 x 5 = 725 Grad Students

Meeting Details Location: Room 2-108, 1830 Bldg Time: noon-1pm Dates: 2006 (All Tuesdays) Jan 10&24 Feb 7&21 Mar 7&21 Apr 5&18 May 2&16