Frameworks Flashcards
Learn frameworks and acronyms
Profitability Framework
Revenue
Price per unit
No. of units sold
Costs
Fixed Cost
Variable Cost
3C and P
Customers Company Competition Product
Customers:
o How are your customers segmented?
o What are your target customers?
o What are the customers’ needs and wants?
Company
o What are your company’s capabilities and expertise? o What is the company’s brand and culture?
o How is its financial situation?
Competition
o What is the market share and growth potential of each competitor?
o How have the competitors performed?
Product
o What is the nature of your products or services?
o Do they meet the needs and wants of the customers?
o What are the complementary goods and the substitutes?
Best for cases like new business, new product, new market entry, growth strategy, and company assessment
4P
Product Place Promotion Price
Product:
o What do your customers need and want from your product or service? o What features does it have to meet these needs and wants?
o How is it differentiated versus the competitors?
Place:
o Where do the customers look for your product or service? o How can you access the right distribution channels?
o How do your competitors distribute their products?
Promotion:
o Where and when you can get across your marketing messages to your target market?
o How do your competitors do their promotions?
Price:
o What is the value of the product or service to the customers? o Are there established price points in this area?
o Are the customers price-sensitive?
o How is your price compared to your competitors’?
Best for marketing cases
M and A McKinsey
Stand-alone value of the targeting company:
Financial factors: profitability, growth, cash flow, etc.
Non-financial factors: capabilities and expertise, brand name, etc.
Synergy of the two companies:
How are the two companies combined better than sum of each (in terms of customers, product, distribution, etc.)?
Other factors: Feasibility Culture Legal issues Etc.
Best for Merge & Acquisition cases
McKinsey 7-S Model
Structure Strategy Systems
Style Staffing Skills Shared Values
Hard Ss:
Structure:
o How is your company/team divided?
o How do the different departments coordinate activities?
o How do the team members organize and align themselves?
Strategy:
o How does your team intend to achieve the objectives?
o How does your team deal with market changes?
Systems:
o What are the main systems that run the organization?
o Where are the controls and how are they monitored and evaluated?
o What internal rules and processes does the team use to keep on track?
Soft Ss:
Style:
o How participative is the management/leadership style?
o How effective is that leadership?
o Do employees/team members tend to be competitive or cooperative?
Staffing:
o What positions or specializations are represented within the team?
o What positions need to be filled?
o Are there gaps in required competencies?
Skills:
o What are the strongest skills represented within your company/team?
o Do the current employees/team members have the ability to do the job? o Are there any skills gaps? o How are skills monitored and assessed?
Shared Values:
o What is the corporate/team culture?
o What are the fundamental values that the company/team was built on?
o How strong are the values?
Best for cases of company improvement, strategy implementation, alignment for companies during changes (restructuring, new systems, organizational merger, etc.)
Porter’s Five Forces
Threat of New Entrants:
Is it easy or difficult to enter the market?
o What are time and cost of entry?
o What are the barriers to enter the market?
o Does your company have any advantages (cost advantage, economics of scale, etc.)?
o Does it have protection for its key technologies?
Threat of Substitute Products or Services:
Do your customers find substitutes easily?
o How about the substitutes’ performance?
o What is the perceived level of product differentiation?
o What is the cost of change?
Bargaining Power of Suppliers:
How easy is it for the suppliers to drive up prices?
o How many suppliers are there?
o What is the size of each supplier?
o How about the differentiation of inputs?
o Does your company have ability to substitute the suppliers?
Bargaining Power of Buyers:
How easy is it for the buyers to drive prices down?
o How many customers are there?
o What is the size of each purchase?
o How is the customers’ price sensitivity?
o Do they have ability to substitute?
Rivalry Competition:
How intense is the competition in your market?
o How have the competitors performed?
o Does your company have any competitive advantages?
o Etc.
Best for cases of new market entry, business strategy development, industry analysis
STP
Segmenting Targeting Positioning
Segmenting:
o What are your customers’ segments?
o What are important characteristics of each market segment?
Targeting:
o What is the potential of each segment?
o Which segment(s) should your company focus on?
Positioning:
o Which marketing mix should be used for the selected segment(s)?
Best for market research cases
SWOT
Strengths Weaknesses Opportunities Threats
Strengths: What are the characteristics that give your organization an advantage over others?
Weaknesses: What are the characteristics that place your organization at a disadvantage relative to others?
Opportunities: What are the opportunities or favorable trends in the market?
Threats: What are the elements in the environment that could cause trouble for the business or project?
Best for cases of new business, new product, new trends and changes, strategic planning
Value Chain framework
Inbound Logistics:
These are all the processes related to receiving, storing, and distributing inputs internally
Operations:
These are the transformation activities that change inputs into finished products and services
Outbound Logistics:
These activities deliver your finished product or service to your customer
Marketing and Sales:
These are the processes you use to persuade clients to purchase from you instead of your competitors
Service:
These are the activities related to maintaining the value of your product or service to your customers, once it has been purchased
Note: The above framework is just a typical value chain for general cases. For each actual case, the value chain can vary a lot depending on each specific industry. For example, value chain of the cement industry would be: Limestone – Clinker – Cement – Concrete – Construction.
Best for cases of product analysis, cost analysis, competitive advantage, management strategy
Supply and Demand framework
Supply:
o What is the quantity of a product or service desired by buyers?
o Is supply increasing, decreasing, or unchanged?
o How do you segment suppliers?
Demand:
o What is the quantity of a product or service that people are willing to buy?
o Is demand increasing, decreasing, or unchanged?
o How do you segment buyers?
Best for cases of market research, market entry, price setting
Internal and External
Best for starting a case for instant structure
Internal factors: company, product, etc.
External factors: industry, competition, etc.
Qualitative & Quantitative
Best for starting a case for instant structure and for structuring reasons and evaluations
Quantitative factors: factors that are quantified in numbers such as unit sales, number of stores, etc.
Qualitative factors: intangibles factors such as brand name, environmental factors, etc.
Cost and Benefit framework
Best for decision making process
Costs: what you have to spend on
Benefits: what you can achieve
BCG 2x2
Best for identifying product development opportunities
on x-axis: Market share -> low-high
on y-axis: Market growth -> low-high
1-4 quadrants -> stars; question marks; dogs; cash cows.
E(P=R-C)M
External Profitability(Revenues-Costs) Market
