Consulting Frameworks

Profitability- Problem

Profit decreasing or not growing

Profitability- Objective

Increase profits

Profitability- Buckets

Market, Revenue, Cost

Profitability- Market

Industry

• Market size, trends, types of products & customers, regulations

Competition

• Shares, advantages, weaknesses, barriers to entry

Profitability- Revenue

Price

• Changes, discounts

Volume

• # customers, #purchases/customer, #amount

Profitability- Cost

Fixed:

• Property, plant, equipment, overhead, rent, administration

Variable:

• Cost based on quantity, distribution, labour

Profitability- Recommendation

Increase revenue

• Sell more, new market or product, improve product, optimize price, promotion, new place, train people, customer process, physical evidence for trust

Decrease cost

• Decrease cost of goods sold, #sold

Revenue Growth- Problem

Client wants to grow revenue

Revenue Growth- Objective

Ideate & evaluate various growth options

Revenue Growth- Buckets

Market, same market, new market, risks

Revenue Growth- Market

Industry

• Market size, trends, product type, regulations

Competition

• Market shares, competitor response

Revenue Growth- Same market

Same product

• More customers, penetration, loyalty, price

New product

• Market size & growth, profitability, synergy, cross-selling

Revenue Growth- New market

Same product:

• Geography, segments, channels, CAGE differences

New product:

• Market size & growth, profitability, synergy, cross-selling, CAGE risks

Revenue Growth- Risks

Internal:

• Capital, people, expertise, operations, cannibalism

External:

• Partners/entry, regulations

Market Entry- Problem

Entering new market or product

Market Entry- Objective

Whether or not to enter

Market Entry- Buckets

1. Is the Market Attractive? 2. Are We Ready? 3. Will It Make Money? 4. How Should We Enter?

Market Entry- 1. Is the Market Attractive?

• Is the market big and growing?

• Are people already buying this type of product?

• Is there room for a new player?

Market Entry- 2. Are We Ready?

• Do we have the people, tools, and money to expand?

• Have we entered other markets before?

• Does our product fit this new market?

Market Entry-3. Will It Make Money?

• How much would we charge?

• How much would it cost to sell here?

• How long until we break even?

Market Entry- 4. How Should We Enter?

• Open our own stores or partner with someone?

• Start small or go big?

• How will we promote ourselves?

M&A- Problem

Aquire another company

M&A- Objective

Evaluate target & recommend

M&A- Buckets

Market, Standalone value, synergies, risk

M&A- Market

Are they the same market?

Industry

• Growth trends, market size, Regulations

Competition

• Shares, competitor response

M&A- Standalone Value

Financials

• Revenue, cost, profitability, value, comparison

Competency

• Management, tech capabilities, expertise

ROI

• Client modelled ROI/break-even

M&A- Synergies

Updated ROI?

Rationale

• Vertical, horizontal, new market entry

Synergy

• Cost, revenue, technical, defense

M&A- Risk

Capability

• Prior exp, funding, management

Afterwards

• Cultural fit, post-merger integration, structure, customer response

Increase Market Share- Buckets

1. Sell More to Current Customers, 2. Find New Customers, 3. Fix the Funnel, 4. Improve Distribution

Increase Market Share- 1. Sell More to Current Customers

• Can we get people to buy more often?

• Can we raise prices or upsell?

• Can we bundle products?

Increase Market Share- 2. Find New Customers

• Can we reach new age groups or regions?

• Are there people who don’t know about us yet?

• Can we enter new sales channels (online, retail, etc.)?

Increase Market Share- 3. Fix the Funnel

• Are people dropping off before they buy?

• Can we improve our website, ads, or stores?

• Is the buying process smooth?

Increase Market Share- 4. Improve Distribution

• Can we sell in more places?

• Can we deliver faster or cheaper?

• Can we work with new partners?

Pricing- Buckets

1. What Can Customers Afford?, 2. What Does It Cost Us?, 3. What Are Others Charging?, 4. What’s the Business Goal?

Pricing- 1. What Can Customers Afford?

• Who is the target customer?

• How much are they willing to pay?

• Do they care more about price or quality?

Pricing- 2. What Does It Cost Us?

• How much does it cost to make the product?

• What profit margin do we need?

• Are there any fixed or hidden costs?

Pricing- 3. What Are Others Charging?

• How much do competitors charge?

• Are we cheaper, same, or more expensive?

• What’s the value difference?

Pricing- 4. What’s the Business Goal?

• Are we trying to gain market share or make money fast?

• Are we a premium or budget brand?

• How will pricing affect our brand image?

Recommendation- Buckets

Recommendation, Risks, Next steps

Recommendation- Recommendation

Ideally you should have 2-3 specific points

Make sure your recommendation answers the question(s) from the prompt. If the prompt is about profitability, your rec should address profitability.

Address any important decisions that must be made by the client

Include numbers from the case whenever possible to support your conclusions

Recommendation- Risks

List 2-3 risks associated with whatever you just recommended

Anything you recommend probably comes with potential problems. This is your chance to acknowledge these, and demonstrate that you are aware of the “side effects” of your recommendation. Did you recommend staff reductions? Acknowledge impacts on morale.

Recommendation- Next steps

List 2-3 next steps the client should take in the future

These can include: areas to gather more data, potential timelines, opportunities for future improvements, etc.