Consulting

Question 1

What the 4 steps of a business case

Answer 1

1. Listen and Clarify :
2. Structure
3. Analyse
4. Conclude

Question 2

What do you do in step 1 of a business case?

Answer 2

Listen and Clarify : Ensure complete understanding biz issue
1 Listen carefully
2Take notes
3Qs
4Take time to evaluate the info

Question 3

What do you do in step 2 of a business case?

Answer 3

Structure : Develop approach to solve problem
1 Structure problem
2 Identify key issues and prioritise
3 Formulate initial hypothesis
4 Say structure and hypothesis

Question 4

What do you do in step 3 of a business case?

Answer 4

Analyse: Ask info to test hypothesis
1. Ask Qs, collect info
2. Develop test, refine hypothesis
3 Iterate
4 Hone in on solution
5 Verbalise thought process

Question 5

What do you do in step 4 of a business case?

Answer 5

Conclude: Synthesis findings to reccos
1. Summarise findings - draw out key facts. n.b. don’t recap
2. Make reccos
3. Consider risks
4. Add next steps

Question 6

What is the the profitability equation

Answer 6

Profits = Revenues - Costs
Revenues = P X Q
Costs = FC + VC

Question 7

How do you calculate the break even quantity

Answer 7

Breakeven Q=FC/ (P- VC)

Question 8

What factors impact price

Answer 8

Market power
Price elasticity
product diffs
Opportunity to have Differential prices: Airlines /concert seats
Methods of pricing:
Cost Plus - travel
Cost Minus - Tesco cards
Market price
Cost matching - Price match
Market Based - Crude oil
Brands - Designer clothes

Question 9

How can we segment the factors that impact volumes

Answer 9

External factors & Internal factors

Question 10

External factors that affects price

Answer 10

1 Competition
Postion/image
customers
profitability
future plan
Substitutes/ compliments
market forces

2 Customer ; need (latents vs demonstrated)
Price sensitivity
Segmentations - product extension

Question 11

Internal factors that affect volume

Answer 11

Logistics
Manufacturing capacity
Distribution channels

Question 12

What are the Growth strategies

Answer 12

–> existing prods to existing customers
–> existing to new
–> new to existing
–> new to new

nb Extensions are not new products

Question 13

What are considerstions to do with Cost

Answer 13

VC vs FC
Short run vs log run
% Capacity utlisation vs impact on unit cost
Weighting of cost
COGS: labour, material overheads
SGA, marketing, sales & distribution, Gen&admin, R&D

Question 14

Costs for a plane

Answer 14

Inventory
Maintenance
Depreciation

Question 15

What are the issues to

Answer 15

1 What is the industry structure
2. Whatare the relevantmarket conduction
3Competition
4 Suppliers
5 Barriers to entry/ exit
6 Current and pot. substitutes

Other considerations:
Key success factors : tech leader ship, consumer insight, brand equity
trends affecting benefits + cost drives`

Question 16

What are the types of industry structures

Answer 16

Competitive
Monooply
Oligopoly

Question 17

What factors do you consider when thinking about the market

Answer 17

Size
Growth
Profitability
Segmentation
Regs
Tech change

Question 18

What factors do you consider for evaluation competition

Answer 18

1. Key players
2. Industry Concentrations
   3 Key Comp market strategy positions
   4 Market share split
   5 How differentiated are Competitors
   6 Describe price competition
   7 Relative cost bases
   8 Competitor vertical or horizontal integrations

Question 19

What factors do you consider for Suppliers

Answer 19

1 Industry production chain
2 Buy side vs sell side - Who and and how powerful?
3 economies of scale/ synergies
4 alternatives
5 trends
6 supply stability/continutity

Question 20

What factors do you consider for Barriers to entry/exit

Answer 20

How signficant? - high learning curves, FC, access to distribution
How often entry/exit?
Competitive response
Steep learning curve?
Brand equity importance
Regulated industry?

Question 21

What are the two approaches for Market Entry

Answer 21

1= 3Cs
Customer
Competitors
Capabilities

2=Current Business vs Proposed Business

Question 22

What factors to explore in Market Entry

Answer 22

Size Market
Understand competition
Analyse Customer needs
Identify gaps in customer needs
match current vs need strengths
evaluate a barriers to entry
Evaluate methods of entry
Previous entry track record & why?

Question 23

How do you define the Market in Market Entry

Answer 23

Industry infrastructure
Assess size, profits & growth –> ask Market capacity
Identify trends ( regs, tech, demographics)
Identify Key success factors
Evaluate risks

Question 24

How do you define the Competition in Market Entry

Answer 24

Key plays
Competitive situations (concentrations and intensity)
Share + positions
Core competencies (Strength, weakness resources)
Competitive response
Differentiation
Cost structure

Question 25

How do you analyse the Customer needs in Market Entry

Answer 25

Segmentation (size, profitability, share growth) Drivers of purchases ( product, price, promos, place`) Power in the market

Question 26

How do you evaluate Company strengths vs new market neeeds in a New Market Entry

Answer 26

Core competencies Productservice portfolio: differentiation ,management workforce key skills resources estabilished 2 potential positioning and price position Source of volume - steal share? expand capacity Niche or mass strategy? Cost structure - scale vs scope CAPEX req Returns

Question 27

How do you evaluate the barriers to market entry

Answer 27

1 customer related: - product differentiation -brand loyalty switching costs access to distribution 2 non customer related - IP economies of scale Capital requirements XP - Regulation

Question 28

How do you evaluate the methods of market entry

Answer 28

1 Build Acquire Partner - Costs & risks

Question 29

How do you evaluate Capacity Expansion

Answer 29

1 Benefit Demand + potential revenue 2 Evaluate means of expansion - Upgrade vs new 3 Market considerations ie regs 4 Impact on demand & pricing: will expansion create XS? 5 Competitive response 6 Cost vs Benefits 7 Alternatives: investigate other options: ie outsource, lease, acquisitions existing plants

Question 30

What issue do we consider when considering how to expand capacity

Answer 30

Availiabilty of locations Customer proximity Transport cost Labour Costs Tech Req Time Required Capital costs of new vs existing CAPEX

Question 31

What are the steps in structuring an acquisition case

Answer 31

1 understand our biz 2 why buy new biz? what are synergies? - Clarifying question 3 Competitive 4 Organisational issues? 5 NPV cost

Question 32

What should you under stand about aqcuiring company

Answer 32

Core competencies cost structure current industry structure

Question 33

Why acquire a a company

Answer 33

1 More resources: increase cacpcity, distribution, broaden products improve tech human cap, brand name, customers (network affect) 2 Decrease costs : Economies of scale,Economies of scope (brand, distribution, advertisement sales force management , talent etc. 3) quicker learning curve 4 ) other strategy

Question 34

What Organisational issues should be considered for M&A

Answer 34

will synergies happen? Preemptive changes to help integrations Can firm do integration now?

Question 35

If vertical is M&A vertical ( new biz) or horizontal ( Capacity)

Answer 35

Why biz separation Coordination cost of using market how to enhance benefits or reduces costs how does ownership add value Organisations issues ( eg agency costs)

Question 36

What is general approach to Investment case

Answer 36

Understand current biz and industry Why biz wants to invest? Do financial analysis (NPV analysis) Other general considerations (competitive response, options value - follow on opportunities) Timing: should the investment be made now other strategic considerations alternatives to making investment

Question 37

How do you do a financial evaluation for investments

Answer 37

1 Upfront cost 2 Cash in flows and outflows over time Opportunity costs (best option-chosen option) - upfront and over time Costs of capital Upsides / down side to investment ( sensitivity analysis)