1. Duke APD Consulting Club
Case Practicing
Duke APD Consulting Club
11/14/2018

2. Meeting Agenda Skills for today Review of the frameworks:
Porter’s five forces
4P’s framework
More tools and concepts
Review of the frameworks:
Profitability
Business situation (4C’s or CPCC)
BCG Matrix (product protfolio matrix)
Case practice
11/14/2018

3. Meeting Agenda Skills for today Review of the frameworks:
Porter’s five forces
4P’s framework
More tools and concepts
Review of the frameworks:
Profitability
Business situation (4C’s or CPCC)
BCG Matrix (product protfolio matrix)
Case practice
11/14/2018

4. Four types of questions
Profit or loss
Growth and increasing sales
Entering a new market
Pricing
11/14/2018
CASE IN POINT: Complete Case Interview Preparation, 8th Edition

5. The competitive advantage in an industry depends on five forces:
Porter’s five forces
The competitive advantage in an industry depends on five forces:
The threat of new entrants
The bargaining power of buyer/customers
The bargaining power of suppliers
The threat of substitute products
Rivalry with competitors
11/14/2018
CASE IN POINT: Complete Case Interview Preparation, 8th Edition
Harvard Business School Management Consulting Club, Case Interview Guide

6. Porter’s five forces
The intensity of the competition determines the attractiveness of the market:
Intense competition allows minimal profit margins
Mild competition allows wider profit margins.
11/14/2018
Harvard Business School Management Consulting Club, Case Interview Guide

7. Porter’s five forces Barriers to entry:
Economies of scale, product differentiation, government subsides, government policy (external analysis of a company)
Capital requirements and switching costs (internal analysis of a company)
Access to distribution channels (value chain)
Proprietary product technology, cost advantages independent of scale (product)
Favorable access to raw materials, locations (collaborators)
11/14/2018
Harvard Business School Management Consulting Club, Case Interview Guide

8. Relationship with buyers:
Porter’s five forces
Relationship with buyers:
Powerful buyer:
Concentrated or purchases large volumes relative to seller’s sales
Purchases standard products or undifferentiated products
Faces few switching costs
Poses a credible threat of backward integration
Has full information
11/14/2018
Harvard Business School Management Consulting Club, Case Interview Guide

9. Relationship with suppliers:
Porter’s five forces
Relationship with suppliers:
Powerful supplier group:
Not obliged to contend with other substitute products
This industry is not an important customer of them
Is an important input to the buyer’s business
Has differentiated products or high switching costs
Posses a credible threat of forward integration
11/14/2018
Harvard Business School Management Consulting Club, Case Interview Guide

10. Porter’s five forces Substitute products:
Substitute products deserve the most attention:
Compete in price with the industry’s product
Produced by industries earning high profits
Insurance
11/14/2018
CASE IN POINT: Complete Case Interview Preparation, 8th Edition
Harvard Business School Management Consulting Club, Case Interview Guide

11. Porter’s five forces Rivalry:
Rivalry among existing competitors increases if:
Numerous or equally balanced competitors exist;
Industry growth is slow;
Fixed costs are high or high exist barriers;
Lack of differentiation or switching costs;
Capacity is augmented in large increments.
11/14/2018
CASE IN POINT: Complete Case Interview Preparation, 8th Edition
Harvard Business School Management Consulting Club, Case Interview Guide

12. Meeting Agenda Skills for today Review of the frameworks:
Porter’s five forces
4P’s framework
More tools and concepts
Review of the frameworks:
Profitability
Business situation (4C’s or CPCC)
BCG Matrix (product protfolio matrix)
Case practice
11/14/2018

13. Four types of questions
Profit or loss
Growth and increasing sales
Entering a new market
Pricing
11/14/2018
CASE IN POINT: Complete Case Interview Preparation, 8th Edition

14. 4P’s framework
More product focused, can be used when analyzing the price of a product
4P’s:
Product
Price
Place/Distribution
Promotion
11/14/2018
Harvard Business School Management Consulting Club, Case Interview Guide

15. 4P’s framework Product: Marketplace position: Brand equity: Strategy:
Particular segment of the market? Mass market or niche product? Differentiated enough to stand out?
Brand equity:
Issues or risks associated with the image or perception of the brand? Some features that can be added to the product to add the perception of value to the consumer?
Strategy:
How does the product fit in the overall strategy of the company/relate to other products? What kind of a financial role this product is playing (cash cow, question mark?)
11/14/2018
Harvard Business School Management Consulting Club, Case Interview Guide

16. 4P’s framework
Price:
Most important factor is the customer’s perceived “value” of the product.
Other facts:
Cost to produce COGS (cost of the good sold)
Price paid previously
Price of substitutes (insurance)
11/14/2018
Harvard Business School Management Consulting Club, Case Interview Guide

17. 4P’s framework Place/distribution
Distribution channel must align with the position of the product:
Most closely aligned with the company’s strategy
Economics of the channel
Delivery: give up the control of delivery?
11/14/2018
Harvard Business School Management Consulting Club, Case Interview Guide

18. To develop a specific brand for the product to capture the most value.
4P’s framework
Promotion/branding:
To develop a specific brand for the product to capture the most value.
Brand message, what are we trying to communicate? How different from competitors?
Does the promotion focus on long-term view of the relationship? (encouraging retention of the customers?)
Which vehicles will be used to influence the decision making process?
Pull strategy: use of advertising, direct mail, telemarketing…
Push strategy: use of trade promotions, sales aids/ sales training programs
Budget for the marketing?
11/14/2018
Harvard Business School Management Consulting Club, Case Interview Guide

19. Meeting Agenda Skills for today Review of the frameworks:
Porter’s five forces
4P’s framework
More tools and concepts
Review of the frameworks:
Profitability
Business situation (4C’s or CPCC)
BCG Matrix (product protfolio matrix)
Case practice
11/14/2018

20. Other tools and concepts
Contribution Analysis (with an example)
Unit contribution= unit selling price ($50) – variable cost ($21.25) = $28.75
Break-even volume = fixed costs ($30,000) / unit contribution ($28.75/unit) = 1,043 units
Break-even Market share = break-even volume (1,043 units) / total market share (14,300 units) = 7% Market share
Total contribution = unit contribution ($28.75/unit) * number of units sold for the year (1,700 units) = $48,875
Net profit = total contribution ($48,875) – total overhead costs (fixed costs, $30,000) = $ 18,875
11/14/2018
Harvard Business School Management Consulting Club, Case Interview Guide

21. Other tools and concepts
Market sizing: (Market size: The number of individuals in a certain market who are potential buyers and/or sellers of a product or service.)
Total revenue in market =
# of customers targeted x
# purchases made per period x
# units per purchase x
Price per unit
How to enlarge each number?
11/14/2018
Harvard Business School Management Consulting Club, Case Interview Guide

22. Meeting Agenda Skills for today Review of the frameworks:
Porter’s five forces
4P’s framework
More tools and concepts
Review of the frameworks:
Profitability
Business situation (4C’s or CPCC)
BCG Matrix (product protfolio matrix)
Case practice
11/14/2018

23. profitability Cost Revenue Fixed cost (value chain)
Variable cost (suppliers)
Revenue
Price per unit (4P’s)
The # of unit sold (4P’s or buyers)
11/14/2018

24. Business situation (4C’s)
Consumers/customers
Identify the consumers and customers
Define the market: decision making unit, process, situations
Company
Internal analysis: key success factors (KSFs), value chain, financial analysis
External analysis: general trend, industrial analysis
Competitor
Competitive analysis: what drives the competitor; what are they doing
Market signals: announcements, industry analysis
Competitive move: risks, retaliation
Collaborator
Buyers: identify good buyers; create good buyers and eliminate unqualified buyers
Suppliers: identify good suppliers, supplier strategy (avoid switching cost)

25. Bcg matrix Four sections in the Matrix
Low growth, high market share: Cash Cows, generate excess cash
Low 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.
11/14/2018
case in point 8th edition, 5: ADDITIONAL TOOLS AND FRAMEWORKS

26. Introduction to Case Practice series
Items to cover:
Mental math,
Market size estimation,
Case interview frameworks,
Basic case interview skills,
Case practice with peers
11/14/2018

27. Meeting Agenda Skills for today Review of the frameworks:
Porter’s five forces
4P’s framework
More tools and concepts
Review of the frameworks:
Profitability
Business situation (4C’s or CPCC)
BCG Matrix (product protfolio matrix)
Case practice
11/14/2018

28. Case Practicing
11/14/2018