lOMoARcPSD|23278329
Consilium dossier - ...
Human resources (Indian Institute of Management Sambalpur)
Studocu is not sponsored or endorsed by any college or university
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
The Consulting and Strategy Club
Presents
The Consulting Dossier (AY:2022-23)
1
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
2
Table of Contents
FOREWORD ............................................................................................................................................ 4
INTRODUCTION .................................................................................................................................... 5
What is Consulting? .................................................................................................................................. 5
Scope of Consulting .............................................................................................................................. 7
Major Consulting firms......................................................................................................................... 8
What is Strategy? ...................................................................................................................................... 8
Corporate Strategy ................................................................................................................................ 8
Business Unit Strategy .......................................................................................................................... 8
Team Strategy ....................................................................................................................................... 9
The Approach to Strategy ..................................................................................................................... 9
Plan ..................................................................................................................................................... 10
Pattern ................................................................................................................................................. 10
Position ............................................................................................................................................... 10
Perspective .......................................................................................................................................... 11
Ploy ..................................................................................................................................................... 11
Planning process ................................................................................................................................. 11
Porter9s Generic Competitive Strategies (Ways of Competing)............................................................. 11
Cost Leadership .................................................................................................................................. 12
Differentiation..................................................................................................................................... 12
Focus ................................................................................................................................................... 13
Vision, Mission, Values & Strategy ................................................................................................... 13
Strategies, Goals, Objectives, and Action Plans ..................................................................................... 14
Basic Frameworks .................................................................................................................................. 15
4P9s of Marketing Mix........................................................................................................................ 15
5C9s of Marketing ............................................................................................................................... 16
Michael Porter9s 5 Forces ................................................................................................................... 18
PESTLE Analysis ............................................................................................................................... 19
McKinsey9s 7S.................................................................................................................................... 20
SWOT Analysis .................................................................................................................................. 21
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
3
Balanced Scorecard ............................................................................................................................ 23
BCG Matrix ........................................................................................................................................ 24
When to use which strategy? .................................................................................................................. 26
Caselets ................................................................................................................................................... 31
Case 1: Yellow Stuff Chemical Company .......................................................................................... 31
Caselet 2- IT Services Firm .................................................................................................................. 33
Caselet 3 3 Coca Cola............................................................................................................................... 35
Advance Frameworks ............................................................................................................................... 36
VRIN Framework ............................................................................................................................... 36
i.
Valuable ....................................................................................................................................... 37
ii. RARE ........................................................................................................................................... 37
iii.
INIMITABILITY ..................................................................................................................... 38
iv.
NON-SUBSTITUTABILITY .................................................................................................. 38
Guesstimates ...................................................................................................................................... 46
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
4
FOREWORD
The purpose of this document is to assist the students of IIM Kashipur in their
preparation for case interviews conducted by consulting firms during placements.
The processes listed below are not necessarily the best way to handle case interviews.
They only serve to give students an idea as to what to expect when they walk into a
case interview.
As companies worldwide get more and more concerned about hiring the right talent
for their key positions, candidate evaluation during interviews has become even more
sophisticated.
The case interview is unique in the sense that it presents the candidate with a problem
to be solved in the context of real-world business situations and seeks solutions that
test both logical reasoning and creativity.
It allows the interviewer to evaluate the candidate9s skills in deconstructing a problem
and communicating their thought process, the ability to think on their feet, handle
ambiguity and assess their comfort with numbers.
Although traditionally used by consulting firms in their recruiting processes, the case
method is now increasingly used for jobs across functions whether general
management or investment banking.
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
5
INTRODUCTION
The consulting industry remains one of the most pursued options to start, and out, a
management career across the globe. It presents a unique combination of solving complex
business problems and an opportunity to work across a diverse set of industries.
In recent years, the focus has shifted from the final placements to summers. This shift offers
a dual advantage to students:
1. Helps students get a flavor of the consulting industry, thus allowing gauging one9s
aptitude for consulting and aids informed decision
2. Presents an opportunity to get a PPO (Pre-Placement Offer) which effectively does
away with the need for final placements for students focused on consulting as a career
choice.
Consilium 3 Consulting and Strategy Club of IIM Kashipur, in its constant endeavor to
provide IIM Kashipur students with valuable insights into the fascinating world of
consulting, has undertaken to develop an exhaustive preparation process specifically aimed
at selection for consulting firms.
The objective of this guide is to lay down the recommended preparation process for
consulting process and selection.
What is Consulting?
Search it on google or look it up in a dictionary, the one definition you are sure to come
across is that Consulting means to be <engaged in the business of giving expert advice to
people working in a specific field=.
It9s easy, isn9t it? From this definition we can say that everyone in India is a consultant
because most of us are keen on giving advice. So, what makes a consultant different? How
is consulting more than just giving advice.
Consulting is a broad term that can have a variety of meanings depending on the industry it
refers to. The true meaning of consulting is helping people solve problems and move from
their current state to their desired state. It involves not just giving advice but help companies
prepare, lead, or implement projects.
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
6
So, consulting can be summarized by these eight fundamental objectives:
•
•
•
•
•
•
•
•
Provide requested information
Provide solution to given problem
Conduct diagnosis that may redefine the problem
Provide Recommendations
Assist Implementation
Build Consensus and commitment
Facilitate client learning
Improve organizational effectiveness
Thus, apart from the traditional objectives of consulting, consultants must learn to satisfy
expanded expectations of their clients.
Talking about the types of consulting, mainly it can be categorized into three:
1. Management Consulting - It is the first thing that comes to mind when people talk
about consulting. Large firms like McKinsey, Bain and BCG are all management
consulting firms hired to help enterprise businesses improve strategy and operations
or manage significant business events like mergers and acquisitions.
2. Corporate Consulting - This is more of a catch-all category for those with a
"consulting" job description in the corporate world. These are services like inhouse consulting, implementation teams, B2B consulting businesses, and a host of
other things. In general, consultants in this category have a corporate track and vast
experience in their industry.
3. Independent Consulting - Thanks to the emergence of gig economy, when
consultants develop expertise in an area, they choose to run their own business rather
than continue as an employee. While different independent consultants build their
businesses in different ways, most use the internet as their primary avenue for
generating leads and landing new client.
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
7
Scope of Consulting
Consulting offers an array of opportunities in fields that are vaster than any other industry. If you
decide to take up consulting as a profession, you can work in different domains like marketing,
finance, HR, IT, and operations.
Consultants work on diverse set of projects which are categorized as
1. Management Consulting
•
•
•
•
•
Strategy Consulting
Operations Consulting
Financial Advisory consulting
Human Resource Consulting
Risk and Compliance
2. Corporate Consulting
•
•
•
•
•
3.
4.
5.
6.
7.
IT consulting
Business Consulting
Environmental Consulting
Software Consulting
Sales Consulting Independent Consulting
Marketing Consulting
Financial Consulting
Image Consulting
Social Media Consulting
Career coaching and consulting
Apart from these career opportunities, consulting provides plenty of scope for personal
development, expanding your skillset and enhancing your CV. Most consultancies offer
excellent training opportunities, along with the chance to build other skills like client
handling, strategic planning, business analysis, team building and delivering under
pressure.
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
8
Major Consulting firms
Consulting is now an established industry, still growing at a rapid pace. The first
management consulting firm was named Arthur D. Little, after the founding MIT professor,
in the 1890s. Initially this firm specialized in technical research, but later became a general
Management Consultancy. Booz Allen Hamilton was founded as a Management
Consultancy by Edwin G. Booz, a graduate of the Kellogg School of Management at Northwestern University, in 1914, and was the first to serve both industry and government
clients. This firm later changed its name to Booz & Co.
What is Strategy?
Strategy is an action taken to attain one or more of the organization9s goals. It can be
defined as <A general direction set for the company and its various components to achieve
a desired state in the future.
A strategy is also about integrating organizational activities and utilizing and allocating the
scarce resources within the organizational environment to meet the present objectives. It is
the knowledge of the goals, the uncertainty of events and the need to take into consideration
the likely or actual behaviors of others.
Strategy, in short, bridges the gap between <where we are= & <where we want to be=.
Strategy can be classified into 3 components:
•
•
•
Corporate Strategy
Business Unit Strategy
Team Strategy
Corporate Strategy: In business, corporate strategy refers to the overall strategy
of an organization that is made up of multiple business units, operating in multiple markets.
It determines how the corporation supports and enhances the value of the business units
within it; and it answers the question, "How do we structure the overall business, so that all
of its parts create more value together than they would individually?" Corporations can do
this by building strong internal competencies, sharing technologies and resources between
business units, raising capital cost-effectively, developing and nurturing a strong corporate
brand, and so on.
Business Unit Strategy: Strategy at the business unit level is concerned with
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
9
competing successfully in individual markets, and it addresses the question, "How do we
win in this market?" However, this strategy needs to be linked to the objectives identified
in the corporate level strategy. As part of this, it's important to think about your core
competencies, and how you can use these to meet your customers' needs in the best possible
way. From there you can use USP Analysis to understand how to strengthen your
competitive position
Team Strategy: To execute your corporate and business unit strategies successfully,
you need teams throughout your organization to work together. Each of these teams has a
different contribution to make, meaning that each team needs to have its own team-level
strategy, however simple. This team strategy must lead directly to the achievement of
business unit and corporate strategies, meaning that all levels of strategy support and
enhance each other to ensure that the organization is successful. This is where it's useful to
define the team's purpose and boundaries using, for example, a team charter; and to manage
it using techniques such as Management by Objectives and use of key performance
indicators.
The Approach to Strategy
In 1987, the Canadian management scientist Henry Mintzberg distinguished five visions
for a strategy for organizations. He calls them the 5 Ps of Strategy. They stand for Plan,
Pattern, Position, Perspective and Ploy. These five components allow an organization to
implement a more effective strategy. A strategy is aimed at the future, concerns the long
term, and involves different facets of an organization. Competition is always a factor, but it
would be a mistake to develop strategies aimed only at competitors. The strategies should
also consider the organizational culture and the other possibilities and developments within
an organization.
With the help of the 5 Ps of Strategy, you can include as many different aspects as
possible and approach the strategy from different perspectives.
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
10
Plan
A strategy is a plan for dealing with situations. A plan must be made before possible actions
are taken and it9s also important that the plan is followed consciously and effectively. Goals
can only be achieved with a good plan. They enable managers to give their teams clarity
and work towards interim evaluations and results. However, a clear organizational strategy
requires more than just a plan.
Pattern
Where planning is about the intended strategy, patterns are about strategies that have been
implemented before. On the one hand, some strategies achieved their intended result. On
the other hand, there are some strategies still must out in more detail. For those, earlier
patterns are an important part of developing the new strategy. It9s about a regular pattern
in the decision-making flow. If certain choices have already been made in the past, an
organization is likely to make those decisions again in the future. In such cases, past
behavior is a pattern that9s included in strategy development. It9s about intentionally or
unintentionally consistent behavior displayed by employees and teams.
Position
This is about the organization9s position in the market, and the interaction between the
internal and external context. It9s important to consider carefully in advance how the
organization wants to position itself. What will its identity look like and does that match the
idea stakeholders have of the organization? This can contribute significantly to developing
a lasting competitive advantage. Considering the strategic position helps against
competitors and to give the organization a firm place in the market.
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
11
Perspective
Strategy is about more than the chosen position; it9s also about the larger perspective. It9s
important to find out how different target audiences perceive the organization. How do the
employees regard their employer? What do customers think of the organization? What is
their image among investors? All these individual perspectives and thought patterns are
valuable sources information for the organization, which they can use to make targeted
strategic choices.
Ploy
It9s also a strategic choice to use a ploy. For instance, one that competitors don9t expect.
Organizations can surprise their environment by implementing a plan that nobody saw
coming. For instance, a phone service provider can mislead others by suddenly also
offering internet service and digital television. That puts them in competition with other
potential providers of those services. It9s a ploy to outsmart the competition.
Planning process
Of course, the Mintzberg 5 Ps of Strategy is part of an organization9s strategy, but it9s also
wise to look at the 5 P9s as separate standpoints that all need to be considered for developing
a strong and successful strategy. It9s useful to employ the 5 Ps throughout the planning
process. They provide relevant information necessary in the initial stages of strategy
development. When implementing the strategy, the 5 Ps of Strategy can help with testing,
evaluation, and possibly adjusting.
Porter’s Generic Competitive Strategies
(Ways of Competing)
Michael Porter, a strategy expert, and professor at Harvard Business School, emphasizes
the need for strategy to define and communicate an organization's unique position, and says
that it should determine how organizational resources, skills, and competencies should be
combined to create a competitive advantage.
A firm's relative position within its industry determines whether a firm's profitability is
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
12
above or below the industry average. The fundamental basis of above-average profitability,
in the long run, IA s sustainable competitive advantage. There are two basic types of
competitive advantage a firm can possess: low cost or differentiation. The two basic types
of competitive advantage combined with the scope of activities for which a firm seeks to
achieve them, lead to three generic strategies for achieving above
average performance in an industry: cost leadership, differentiation, and focus. The focus
strategy has two variants, cost focus and differentiation focus.
Cost Leadership
In cost leadership, a firm set out to become the low-cost producer in its industry. The
sources of cost advantage are varied and depend on the structure of the industry. They may
include the pursuit of economies of scale, proprietary technology, preferential access to
raw materials, and other factors. A low-cost producer must find and exploit all sources of
cost advantage. if a firm can achieve and sustain overall cost leadership, then it will be
above-average performer in its industry, provided it can command prices at or near the
industry average.
.
Differentiation
In a differentiation strategy, a firm seeks to be unique in its industry along some dimensions that are
widely valued by buyers. It selects one or more attributes that many buyers in an industry perceive as
important, and uniquely positions itself to meet those needs. It is rewarded for its uniqueness with a
premium price.
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
13
Focus
The generic strategy of focus rests on the choice of a narrow competitive scope within an
industry. The focuser selects a segment or group of segments in the industry and tailors its
strategy to serving them to the exclusion of others.
The focus strategy has two variants.
•
In cost focus a firm seeks a cost advantage in its target segment, while in
•
Differentiation focuses on a firm seeking differentiation in its target segment. Both variants of
the focus strategy rest on differences between a focuser's target segment and other segments
in the industry. The target segments must either be homebuyers' unusual needs or else the
production and delivery system that best serves the target segment must differ from that of other
industry segments. Cost focus exploits differences in cost behavior in some segments, while
differentiation focus exploits the special needs of buyers in certainsegments.
Vision, Mission, Values & Strategy
Vision Statement: A mental picture of what an organization wants to accomplish or
achieve. For example, our vision may be a successful winery business or an economically
active community.
Mission Statement: A general statement of how the vision will be achieved. The mission
statement is an action statement that usually begins with the word "to".
Core Values: Core values define the organization in terms of the principles and values the
leaders will follow in carrying out the activities of the organization.
There is a close relationship between the vision and mission. As the vision statement is a
static mental picture of what we want to achieve, the mission statement is a dynamic
process of how the vision will be accomplished.
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
14
Strategies, Goals, Objectives, and Action
Plans
Once the core values are identified and statements of vision and mission are created, one
can then develop the strategies, goals, objectives, and action plans needed to activate the
mission and achieve the vision. Defining the vision and mission are critical before starting
on strategic elements. After all, what is the strategy trying to achieve if not the company
mission? And what is the mission if not an embodiment of the vision?
As we have discussed, a strategy is a unique approach to how to use the mission to achieve
the vision. Strategies are critical to the success of an organization because this is where a
plan for doing something is outlined.
Goals: A goal is a milestone(s) in the process of implementing a strategy. Examples of the
business goals are:
•
•
•
Increase profit margin
Increase efficiency
Capture a bigger market share
Objectives: An objective turns a goal9s general statement of what is to be accomplished
into a specific, quantifiable, time-sensitive statement of what is going to be achieved and
when it will be achieved. Examples of business objectives are:
•
•
•
Earn at least a 20 percent after-tax rate of return on our investment during the next
fiscal year
Increase market share by 10 percent over the next three years.
Lower operating costs by 15 percent over the next two years through
improvement in the efficiency of the manufacturing process.
Action Plans: Action plans are statements of specific actions or activities that will be used
to achieve a goal within the constraints of the objective.
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
15
Basic Frameworks
In this section, we would be explaining a few frameworks which come in handy while
analyzing cases. These frameworks aren9t designed to directly give you answers for the
cases but to facilitate your understanding about the underlying problems and help you
logically address them while ensuring you have taken everything into consideration.
4P’s of Marketing Mix
(https://www.youtube.com/watch?v=Mco8vBAwOmA)
This model is meant to help you enhance the components of your marketing mix i.e., the
way you take a new product to the market. It helps you in defining the options in terms of
the 4Ps 3 Price, Place, Product & Promotion so that your offering can satisfy or meet certain
specific needs of the customers.
A good way of understanding the 4Ps is through questions which you need to ask to define
the marketing mix. Mentioned below are some such questions which can better help you
understand the 4 elements.
•
•
•
•
•
How do our prices compare to the competitions9?
How was our price determined?
Are we priced right?
If we change our prices, will it impact on our sales volume?
What sort of discounts can we offer to what segment of the
market?
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
16
•
•
•
•
•
How do we get our product to the consumer?
How can we increase the channels of distribution?
Do our competitors have products in places we don9t?
Do they serve markets that we can9t reach? If so, why?
How can we reach them?
•
•
•
•
•
What is our company9s niche?
What are our products and services?
Which needs of the customer does it satisfy?
How and where will the customer use it?
How is the product different from the competitors?
• How can we best market our product?
• Are we reaching the right market?
• What sort of marketing campaigns has the company done in the
past?
• How effective were they?
• Can we afford to increase our spending on campaigns?
5C’s of Marketing
(https://www.volusion.com/blog/situation-analysis-the-5-cs/)
This framework is used to analyze five important areas which are involved in making
marketing decisions for a company. This provides a good base to ensure that while coming up
with a decision all the basics have been covered and you are able to
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
17
Mentioned below are the sample questions which can be asked to understand each aspect:
Who are they? What
Consumer
do they want?
Are you able to fulfil those needs?
Are you able to retain customers?
How can you get more?
Who are the biggest competitors?
Competition
What is the market share of all major players? Has it changed? How is
your product offering different from the competition?
Do you possess any strategic advantage over them?
Collaborator
Determine if there is an outside source or third-party help that can aid the
company such as distributors, suppliers etc.
What do you know about the company?
Company
How big is it?
What kind of products or services is it offering to clients?
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
18
Context
Determine how the external factors could affect your strategy.
PESTLE framework comes in handy in this case. It will be explained
later.
Michael Porter’s 5 Forces (https://www.youtube.com/watch?v=lPHruQHAECw)
This framework wasn9t developed for use in cases, however, whenever you are dealing with
a case related to the development of a new product or starting a new business or entering a
new market, this framework fits in perfectly. Porter states that the state of competition in
any industry is dependent on the following 5 basic competitive forces
or factors:
• Competition in the Industry 3 This refers to the number of competitors in the
industry and their ability to undercut the company, greater the number of competitors
and equivalent products, the lesser the power of the company.
Conversely, when the competition is low, there is greater potential for the corporation
to charge a higher price.
• Potential of new entrants into the industry 3 An industry with strong entry barriers
is an attractive feature for any company, this allows them to charge higher prices for the
services offered and negotiate terms in their favor. Conversely, if it takes less time and
resources for a competitor to establish itself in the company9s market then the
company9s position may be weakened significantly.
• Power of Buyers 3 This refers to the ability of the customers to drive the product
prices down. It depends on how many buyers the company has; how significant they
are and how much it would cost the company to get into new markets or customers. A
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
19
smaller customer base gives them more power to negotiate better deals and lower
prices. A company with a larger customer volume will be able to easily charge higher
for increased profitability.
• Power of Suppliers 3 This force addresses the impact which the suppliers can have
on the company, for instance, driving up prices for the supplies or restricting their
quantity. It is usually affected by the number of suppliers of key inputs for the services
and goods, how unique these inputs are, and what is the switching cost involved. The
fewer suppliers the more dependent the company is on them, giving the suppliers more
power to drive up the costs and push for advantage.
• The threat of Substitutes 3 Substitute services and goods which can be used in place
of a company9s product pose a threat to the company9s position in the market since
customers can forego buying their product. Companies whose products cannot be
substituted would possess more power to increase the prices and get favorable terms
PESTLE Analysis
(https://pestleanalysis.com/examples-of-pestle-analysis/)
This tool is used by corporates to track the external environment they are operating in or
are planning to enter through the launch of a new product, service, or project. It provides
the user with a bird9s eye view of the entire business scenario from several different angles
to check and keep a track of while coming up with a suitable idea or plan.
•
•
•
Political 3 it includes factors such as government or government body9s ability to
influence the economy or a particular industry. Political factors include tax policies,
fiscal policy, trade tariffs, levels of corruption, legal red tapes, labor laws, land laws
etc. which can have a considerable impact on the business environment.
Economic 3 these factors are direct determinants of the economic performance of the
country and can have long term effects. Factors such as economic growth rate,
exchange rate, interest rates, inflation rate, disposable income, unemployment rate,
FDI etc. are taken into consideration here.
Social 3 these factors take into consideration the social environment of the industry
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
20
•
•
•
and gauge factors like demographics, population metrics, lifestyle attributes,
cultural barriers etc.
Technological 3 these factors include technological innovation which can impact
the operations of an entire industry or the market both unfavorably and favorably.
This can also include the R&D, automation and the amount of technological
awareness possessed by the market.
Legal 3 this can include both internal laws of the company and external laws of the
country. The legal analysis considers both and then formulates the strategy. Factors
such as discrimination laws, employment laws, antitrust laws, copyright and patent
laws, health and safety laws, consumer protection laws are taken into consideration
here.
Environmental 3 these are largely the factors that are influenced by the
environment of the country. Some of the factors taken into consideration include
weather, geographical location, climate, environmental offsets, calamities,
environmental policies etc. such factors play a crucial role for industries such as
tourism, agriculture, farming etc.
McKinsey’s 7S
(https://tallyfy.com/mckinsey-7s-framework/)
This is a tool which helps in analyzing any corporates organizational design by taking into
consideration the below 7 mentioned internal elements to identify whether they are
effectively aligned for the company to achieve its objectives. The key point here is to see
that all 7 areas are interconnected and a change in one ask for a change in all others to function
effectively. So, any element if tweaked must be done so keeping in sync with the others.
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
21
•
•
•
•
•
•
• Strategy 3 It is basically
a plan developed by the
firm
to
achieve
a
competitive advantage and
compete successfully in
the market. In general, any
good strategy must be articulated well, must be long term and help the company in
getting a competitive advantage. Usually, a short-term strategy is said to be a poor
choice, however, if aligned with the remaining elements it can deliver good results.
Structure 3 the structure refers to the way business unit and divisions are done,
including the chain of command and who is accountable for what, basically the
organizational chart of the organization. It is the most easily changeable elements in
the framework.
Systems 3 this includes the procedures and processes of the company revealing daily
business activities and the decision-making processes. This is the area which helps
determine how business is done and should usually be the focus when it comes to
organizational change.
Skills 3 these are the competency and abilities possessed by the organization9s
employees and includes the activities they perform well. During organizational
change, questions often arise of what skills are needed to enforce a new strategy or
new structure.
Staff - this concerns the manpower aspect of the organization, as in how many
employees are needed in the organization, how would they be recruited, trained,
rewarded, and motivated.
Style – this represents the management style of the top-level managers of the company,
what actions do they take, how are they interacting and their general symbolic value.
Shared Values – these are at the core of this 7S model. These include the standards
and norms that guide the behavior of the employee and the actions of the company,
placing them at the very foundation of all organizations.
SWOT Analysis
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
22
(https://www.youtube.com/watch?v=mR9eICQJLXA)
SWOT analysis is a very simple yet powerful tool which can help in developing the
business strategy if you are building a startup or in guiding an existing company. Read below
for better understanding:
STRENGTH is the positive and internal attributes of the company and usually
are things within your control, some sample questions to ask to identify your
strengths:
•
•
•
•
Which business processes are successful?
What assets does your team possess (knowledge, network, skills, reputation etc.)?
What physical assets does your company have (equipment, customers, cash,
patents etc.)?
What advantages do you possess over your competition?
WEAKNESSES are usually the negative factors that can detract you from your
strengths, usually the things that needs improvement to compete.
Some questions to ask:
•
•
•
•
Are there things which your business needs
stay competitive?
What are the business processes needing improvement?
Are there any gaps in your teams?
Are you well located to ensure success?
to
do
in order
to
OPPORTUNITIES include the external factors of your business environment
which can contribute to the success of your business.
•
•
•
•
Is the market you are operating in growing, or are there any trends that can
encourage people to buy what you are selling?
Are there any events in the foreseeable future which can help your company use to
grow the business?
Are there any changes which might be done in the regulations which can impact your
company in a positive manner?
What is your brand perception in the market? Do customers think highly of you?
THREATS include external factors which are out of your control. For such
factors, it's best to put in place a contingency plan to mitigate the risk they pose
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
23
•
•
•
•
•
Are there any potential competitors who might enter the market?
Will the suppliers always supply the raw material to you at prices that you need?
Can future technological developments change the manner of conducting
business?
Is consumer behavior changing against you?
Are there any market or industry trends which can become threats?
Balanced Scorecard
(https://www.youtube.com/watch?v=biyGxEix5Zs)
It is a performance metric utilized in strategic management for improving and identifying various
internal functions of the business and to estimate their external outcomes. It is used for measuring and
providing feedback to organizations. Data collection is an important aspect when it comes to providing
quantitative results, the information gathered is used by managers for making better decisions for the
organization. This tool isolates 4 areas that need to be analyzed, and include 3 Learning and Growth,
Business Processes, Customers & Finance.
Balanced Scorecards help in providing information about the company while viewing the
objectives of the company. This tool can be used for implementing strategy mapping to
check where in the organization value is being added. Information is usually collected and
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
24
analyzed from four aspects of a business:
1. Learning & Growth 3 it is analyzed through evaluating the knowledge and training
resources. This leg handles how well the information is being captured and how
effectively the employees are utilizing this information to get a competitive edge
over the industry.
2. Business Processes 3 It is analyzed by evaluating how good is the company9s
operational management. Operational aspect is easily gauged through the gaps,
delays, shortages, bottlenecks, or wastages in the organization.
3. Customer Perspective 3 This data is collected to gauge the customer9s satisfaction
level with price, quality and availability of services or products.
4. Financial data 3 this incudes data points such as sales, income, expenditures to gauge the
company9s financial performance. The metrics being considered can include, budget
variances, financial ratios, income targets etc.
These 4 legs complete the Vision & Strategy of the organization and require an active
management style to evaluate the data collected. The balanced scorecard is therefore
often referred to as a management tool rather than only a measurement tool.
BCG Matrix
(https://www.youtube.com/watch?v=sNAUWpk_yvs)
This tool was designed by BCG to help with long term strategic planning to help a business
in considering growth opportunities by reviewing their portfolio of products and helping
them decide to discontinue or develop products or where to invest. BCG Matrix is also
referred to as growth share matrix. It is divided into 4 quadrants based on the analysis of
relative market share and market growth, as shown in the diagram below:
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
25
What the matrix means:
• Dogs 3 these products have a low market share or low growth. Such products are best
removed from the market as they tend to drain the company9s resources. However, this
might be an over-simplification since there lies some potential to generate revenue
with little cost
• Problem Child or Question Mark 3 These products have a low market share in a
high growth market. For these products it is not known whether they would become a
star or go down into the dog quadrant. Such products need a lot of investment to push
them to the star quadrant.
• Stars 3 Products with a high market share in a high growth market. These products can
be market leaders however require significant investments to retain that lead. They
help in generating more ROI in comparison to other categories of products.
• Cash Cows 3 Products with a high market share in low growth market. Here there is a
simple rule to follow, milk these products as much as you can without killing them,
this category often involves well-established and mature products.
This matrix is more relevant for larger businesses operating in multiple markets
offering multiple services, however it can be used by smaller businesses too.
Here are the four quadrants of PepsiCo9s growth-share matrix:
Cash Cows 3 With a market share of 58.8% in the US, Frito Lay is the biggest cash
cow for PepsiCo.
Stars – Even though Pepsi9s share in the market has been reduced, it9s still the star
for PepsiCo because of its brand equity. Other stars are Aquafina Tropicana,
Gatorade, and Mountain Dew.
Question Marks – Since it9s a mystery whether the diet food and soda industry will
boom in the future and will PepsiCo9s products will find their place or not, Diet
Pepsi, Pepsi Max, Quaker, etc. fall in the question marks section of the PepsiCo9s
BCG matrix.
Dogs – As of now, there isn9t any product line that falls in the dog9s section of
PepsiCo9s BCG matrix. However, seasonal, and experimental products like Pepsi
Real Sugar, and Mtn Merry Mash-up can be inserted in this section.
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
26
When to use which strategy?
Type
Approach
Elements
Entering a New
Market
Market
Competition
Market
share
Comparative products and services
Barriers to entry
Entry
Start from scratch Acquire
an existing player
Industry Analysis Current
Structure
Suppliers
Future
Mergers
Acquisitions
& Objectives
Price
Industry Life
cycle
(growth,
transition,
maturity)
Performance, margins
Client9s position within the industry
Major players and market share
Industry changes (new players, new technology)
Drivers (brand, size, technology) Profitability,
Margins
How many?
Product availability?
What9s going on in their market?
Expanding or shrinking?
Mergers and acquisitions?
Barriers to entry or exit?
Substitutes
Increase market access (boost brand or increase
market
share)
Diversify holdings
Pre-empt the competition
Enjoy tax advantages
Incorporate synergies (cost savings, cultural
integration, or distribution channel expansion)
Increase shareholder value
Fair? Affordable?
How to pay?
If the economy sours...?
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
27
Due Diligence
What shape is the company in?
A market Leader
The industry?
How secure are its markets and customers? What
are the margins?
The below table illustrates the mechanism or the roadmap to be used based by a firm
basis the need or the market condition in which the company operates.
What is the best competitive response to
acquisition?
What are the legal issues?
Margins
Exit Strategies
New Product
Product
How long to keep it?
Divest parts of the organization?
Special or proprietary?
Financing?
Patented?
Substitutions?
Advantages & disadvantages? Place in product line?
Cannibalizing our own products? Replacing existing
product?
Market Strategy
Expansion of customer base
Prompts to competitive response
Barriers to entry
Major players and market share
Customers
Who?
How to reach them?
Retention 4 how to hold them?
Financing
How funded?
Best
allocation
offends? Debt viable?
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
28
Pricing Strategies Pricing
Competitive pricing (Competitors9 prices
comparators, substitutions, consumer buying
habits)
Cost-based pricing (Cost of goods sold, breakeven
point, profit added)
Price-based costing
Company objective (market share and profits)
Growth Strategies Assessment
Is the industry growing?
How are we growing compared to the industry?
Are our prices relative to competitors9?
What are our competitors marketing and
development strategies?
Which segments have the most potential?
Funding for higher growth
Strategies
Increase distribution channels Increase product
line
Invest in major marketing campaign Diversify
products or services offered
New Business
Market
Who is the competition? What is their market
share? Products comparison Barriers to entry
Management
Cost
Analysis
Benefit Marketing and strategic plan Distribution
channels Product
Customers Finance
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
29
Competitive
Response
Why?
New product?
Competitor9s strategy changed.
Other competitors9 increased market share
Strategy
Acquire a competitor Merge with competition
Copy competitor
Hire the competitor9s management
Increase profile with marketing campaign
Increasing Sales
Assessment
Growth relative to market share Changes in
(increasing sales market share Customer polls
doesn9t necessarily
mean increasing Prices competitive?
profits)
Competitor9s strategies (marketing and product
development)
How?
Increase volume
Increase prices
Create seasonal balance
Reducing Costs
Assessment
Get cost breakdown
Investigate
competitors
for
irregularities
Consider labor-saving technologies
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
Benchmark
lOMoARcPSD|23278329
30
Cost analysis 4
Union wages, suppliers, materials, economies of
scale, increased support system
Internal
Cost analysis 4
External
Economy, interest rates, government regulations,
transportation/shipping strikes
Increasing Profits Revenue
(Always look
for
external
factors first)
Identification of revenue streams? Percentage of total
revenue of each? Unusual balance?
Have percentages changed?
ID fixed costs
ID variable costs
Shifts in costs
Unusual costs
Benchmark competitors
Reduce costs without damaging revenue streams
Costs
Volume
Turnaround
Strategy
Expand into new areas Increase
sales (volume and force) Increase
marketing
Reduce prices
Improve customer service
Learn about company
Review services, products, finances
Secure funding
Review talent and culture Determine
short term / long term goals Write a
business plan
Reassure clients, suppliers
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
31
Caselets
A problem statement has been given. The consultant tries to solve the case using strategies
mentioned in the above table. A comment section has been provided at the end which tries
to evaluate the approach.
Case 1: Yellow Stuff Chemical Company
Our client is a manufacturer that makes industrial cleaning solvents and pesticides. Recently, sales have been
declining, mostly due to new EPA guidelines. The company has been <dumping= its old products overseas into
countries that have less stringent environmental laws as well as re- engineering its products to fit the new EPA
guidelines. Further evaluation of sales, both past and future, indicates that the chemical industry has, and will,
continue to grow slowly over the next five to seven years, with 3% annual growth.
Management has decided to diversify. While Yellow Stuff wants to keep its chemical business intact, it also wants
to enter an industry that has long-term, high-growth potential. Yellow Stuff has hired us to help determine what
industry or industries it should enter.
While I don9t want you to come up with a list of industries, I do want you to tell me what sort of things you should
be researching to determine what industry our client should diversify into.
So, as I understand it, our client is a chemical manufacturer who wants to diversify outside the chemical
industry into a high-growth industry.
3
That9s right.
And you want me to come up with a strategy on how to find the best possible match.
3
Yes.
Besides diversification and profit, are there any other objectives that I should know about?
3
No.
What does the company define as high growth?
3
10% a year.
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
32
Well, the first thing I’d do is obtain a list of all the industries and eliminate the ones that are growing less
than 15% or have a potential in the next year of growing less than 15%. How much risk is Yellow Stuff
willing to take?
3
Medium.
Then, I’d also eliminate any high-risk or volatile industries. Next, I’d study the list to see if there are any
synergies that we can share.
3
Such as?
Synergy created with acquired company capabilities in terms of Customers, Products, Capability &
Competition. We can leverage this acquisition to get a competitive advantage over our competitors.
-
Can you share any example?
One example might be to look to see if there is a sister industry where our customer list is the same. If we
sell cleaning solvents to Pepsi and then we get into manufacturing aluminum, maybe we can sell Pepsi soda
cans. We also have a history of marketing and selling business-to-business, so we might want to stay away
from consumer products. We could look at other commonalities, such as distribution channels and sales
force. Once we narrow the list, we need to analyze the market to find out who the major players are and
what, if any, barriers to entering the market are.
3
Okay, what else?
There are three ways to enter a new market: Start from scratch, acquire an existing player, or do a joint
venture. Depending on the industry and the barriers…
3
What sort of barriers are you talking about?
Could be government regulations. If you try to start a business and your products must get approved by the
FDA or the EPA, then that could take years. In a case like that, you might want to acquire an existing
player. A barrier might be a stranglehold on the market if, for example, two companies hold an
extraordinarily large market share and have a habit of destroying new entries. If raw materials or supplies
proved hard to come by, that would be another barrier.
3
Okay.
Did I mention substitutions as a barrier?
3
What9s next?
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
33
I’d look very carefully at the future of the industry. It currently may be growing over 10%, but is that going
to last and for how long? Is the market growing or shrinking? Is the number of players growing or
shrinking? Have there been many mergers or acquisitions lately? And I’d take some time to think about
exit strategies as well.
3
Summarize for me.
I’d identify all the relevant industries, analyze their markets, and determine the best way to enter that
market. I’d also conduct an analysis to see if the company might not be better off just investing the money
into the stock market. It may make a better return and its investment would be a lot more liquid.
Type of case: Entering a new market Comments: Ninety percent of this question is irrelevant. It is not about the
chemical industry; it9s about entering a new market. The candidate took the time to ask for the company9s
definition of high growth. From there, it was straight logic. Now, some of you might argue that this was really a
growth- strategies question, but the question tells us that the client really wants to diversify, which narrows the
growth strategies to one diversification. The question then becomes one of identifying the new industry.
Caselet 2- IT Services Firm
Statement of the Problem: Your customer is a Bangalore-based IT services firm that has been experiencing
falling profitability. Diagnose the issue and make recommendations for viable solutions.
Thank you so much, Sir, for stating the situation. I'd like to confirm that our client is an IT services
organization with a dwindling profit margin. We must identify the issue and provide potential
solutions.
Correct.
So, before I begin the analysis, I'd like to clarify a few points to gain a better grasp of the situation
and our client. Is that all right?
Yes, please do so.
As far as I can tell, we are experiencing a decline in profitability. I wanted to know if the issue is
unique to our client or if it is a problem that affects the entire industry.
The issue is unique to our client. The problem has existed for quite some time.
Can you tell me where the client's customers are located?
The majority of the clients' customers are from the United States.
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
34
Thank you for providing this information. Finally, a clarification query. I wanted to learn about the
industry's competitive landscape.
For the sake of simplicity, imagine that our client is the industry's market leader.
I'd like to take a few moments to collect my thoughts and devise a structure for the analysis. Is that
all right?
Yes, please do so.
Thanks. Because we are experiencing a decrease in profitability, I'd like to begin the analysis with
sales and cost. Could you assist me with the current trends?
Revenues have been consistent. Let's start with the costs.
Yes, Sir. Our client's key costs would be HR, Infrastructure, and any other charges because they are
an IT services company. What exactly do you mean when you say, "infrastructure costs"?
Infrastructure costs include the costs of maintaining gear such as servers and computers/laptops, as well as
the price of licensing software. Are there any additional expenses to consider?
Let's start with the human resources costs and then go on to the others. What elements do you believe
add to the expense of human resources? HR costs, in my opinion, should be a function of the number
of people in the company, as well as their salaries paid to each employee, as well as the staff mix, or
the number of employees in various positions. Is one of these the problem? Let's have a look at the
personnel mix. Why do you believe this will contribute to rising costs?
The HR expenditures will be greatly influenced by the number of employees in various roles. In any project
team, for example, there may be a manager and 2-3 developers, each with a distinct wage. So, even if there
are a smaller number of employees, if there are more, the expenditures will be higher if there are more
senior staff.
Is there any alternative method for different employees to be compensated differently?
There could be a difficulty with the communication if the organization has multiple onshore and offshore
personnel. A combination of onshore and offshore operations, resulting in increased costs Yes, that was one
of our client's primary concerns.
Thanks. We've run out of time. Let's wrap things up here.
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
35
Caselet 3 – Coca Cola
Hi, Let's begin with a hypothetical situation. Coca-Cola in Thailand is your client, and sales in its
fountain division have been falling for the past year. Can you figure out why and make suggestions?
Sure, let me a moment to come up with a few clarifying questions.
So, first and foremost, where does Coca-Cola fit into the value chain?
Coca-Cola is a company that produces and distributes soft drinks. Do you know what the fountain business
is like now that you've lived abroad?
Yes, the soda machine drinks in fast food restaurants are included in the fountain industry. Can you
tell me where I can find all these soft drink fountains in a city?
They can be found in fast food restaurants, metro station vending machines, and businesses
Okay, that's great. Please continue.
So now I'd like to investigate the reasons for the revenue drop. Product mix in terms of revenue, price, and
quantity. The sort of drink sold (coke/sprite, etc.) could be included in the product mix.
Could you please explain on each aspect that impacts income and provide me with potential concerns
that could result in a decrease in each factor?
Sure, to begin with, prices may fall, resulting in a decrease in revenue. Second, the volumes may have
decreased because of a production, distribution, or customer pull issue. Finally, both price and volume may
have shown a preference for a certain soft drink (product mix). We can look at the value chain in terms of
production. Coca-Cola will make the concentrate and transfer it to a bottling factory, where it will be
distributed to various retail outlets. The challenges in terms of manufacturing, specifically the facility where
the concentrate is made and the bottling plant, could include capacity utilization, labor efficiency, supplier
contracts, and so on. When it comes to customer attraction, Coca-popularity Cola's among customers may
have waned. The necessity, awareness, accessibility, pricing, and customer experience may all influence
demand. Soft drink consumption may have decreased because of rising health consciousness and a general
shift in tastes and preferences. It's unlikely that Coca-Cola fountains will become less well-known in this
situation. Coca-Cola fountain accessibility may have decreased in relative terms, for example, if individuals
find it easier to buy bottles/cans from local stores or supermarkets. The affordability of Coca-Cola
beverages from fountains could have changed if the price of those drinks increased or if macroeconomic
conditions changed, resulting in a decrease in income, making visits to restaurants and other places less
cheap. A decrease in income could be caused by a negative change in the consumer experience when getting
drinks from fountains. For example, if a restaurant's system shifts from employees pouring drinks and
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
36
handing them to customers to a self-serve system where customers must pour their own drinks, they may
prefer to buy a bottle instead because it is less of a hassle for them, and they can carry it around more easily
if they don't finish the drink right away.
This is a complete list, but can you think of anything more that may be included in a product mix?
I can only think of two things: the sort of drink and the size of the cups. What about the fountains'
ecosystem?
Coca-Cola will have to find the machines for the fountains as well.
Can you give me a rundown of any probable concerns with the machine?
Yes, from Coca-standpoint, Cola's the problem could stem from two factors: the purchase of the
product and the distribution of the product machine, followed by its repair and upkeep in terms of
purchasing the machine, there could be issues such as supplier contracts expiring, supplier
bargaining power increasing, resulting in higher prices, a new competitor entering the market and
creating exclusive contracts with our suppliers, an issue with our existing suppliers' capacity, and so
on. In terms of maintenance and repair, we could run into problems locating spare parts, repeating
minimums with machines that require frequent, costly maintenance, and so on.
Advance Frameworks
VRIN Framework
(https://www.youtube.com/watch?v=V4mLR3FimKk)
The VRIN Framework is a business strategy tool to evaluate options in a structured way to make better
business and strategic decisions. VRIN framework is used to identify a sustainable competitive advantage
for a company in an industry.
VRIN framework is derived from the VRIO framework which is a part of a much larger strategic scheme
for a firm.
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
37
VRIO is an acronym for the four-question framework you ask about a resource or capability to determine
its competitive potential:
•
The question of Value
•
The question of Rarity
•
The question of Imitability (Ease/Difficulty to Imitate)
•
The question of Organization (ability to exploit the resource or capability).
In VRIN, the last letter changes to N to signify non-substitutability. Both frameworks are essentially
applied to assess and analyses a firm9s internal resources and its potential for applying these resources to
achieve competitive advantage. It complements the PESTLE analysis method, which is mostly used by
marketers to analyses and monitor the macro-environmental factors that have an impact on an organization.
Next, we analyze each of these elements in detail.
i. Valuable
The basic question asked by the V in the VRIN framework for internal analysis is <Is this resource or
capability valuable to the local firm?= In this case, the definition of value is whether the resource or
capability works to exploit an opportunity or mitigate a threat in the marketplace. If it does do one of those
two things, it can be considered a strength of the company. However, if it does not work to exploit an
opportunity or mitigate a threat, it is a weakness.
ii. RARE
Resources that are available to all competitors rarely provide any significant competitive advantage A
firm9s resources and capabilities must be both short in supply and persist over time to be a source of
sustained competitive advantage. If both elements (short supply and persistence over time) aren9t met, then
the resources and capabilities a firm has can9t be a sustained competitive advantage. Example of Rarity - A
janitor who defines his/her job as helping the firm make and sell better products instead of just referring to
their job as simply cleaning up facilities is quite unusual.
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
38
iii. INIMITABILITY
An ideal resource cannot be obtained by competing businesses. Firms with valuable and rare resources,
which are hard to imitate by other firms, can gain the first-mover advantages in the market and can hence
gain competitive advantage. If there is no cost or little cost in obtaining this rare and valuable resource, the
fellow firms can imitate the competitive advantage to gain competitive parity (firms that create the same
economic value as their rival9s experience competitive parity). However, sometimes it is hard for other
firms to get access to the resources and imitate the innovative company9s strategy. As a result, the
innovative companies that implement its strategies based on costly-to-imitate and valuable resources can
gain long-term competitive advantage, which ensures a company9s sustained success (Hill & Jones, 1998).
Hence, to sustain the competitive advantage, it is not sufficient for a firm's resources and capabilities to be
valuable and rare - they should also be inimitable.
iv. NON-SUBSTITUTABILITY
An ideal resource cannot be substituted by any other resource. This is another important factor to gain an
edge over competitors. Resources should not be able to be replaced by any other strategically equivalent
valuable resources. If two resources can be utilized separately to implement the same strategy, then they
are strategically equivalent. Such resources are substitutable and so are not sources of sustained competitive
advantage.
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
39
1. ANSOFF MATRIX (https://www.youtube.com/watch?v=arzXIjgCnhE)
Ansoff Matrix is a tool which helps to establish the possible growth strategies for an organization.
Ansoff Matrix traces its roots in a paper written by Igor Ansoff proposing the marketing strategy of a
product involved 4 stages- Market Penetration, Product Development, Market Development and
Diversification.
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
40
The four threads are as follows: 1. Market Penetration
The Company continues its focus on the same market / market segment with the same product, thereby
achieving economies of scale and benefits of learning effects. This improves further the market share
and profitability. However, the company gets too dependent on a particular market segment and a
particular product which is risky if the product is in the maturity / decline stage or faces technology
obsolescence or if the market / customer needs change drastically in the rapidly changing business
environment.
2. Product Development
The Company continues its focus on the same market (Mission) but introduces new products, which
are likely to have a significant growth potential in the market. Since the company is known in that
market, there is a better chance for its new products to be accepted by the customers. This option is
riskier than market penetration.
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
41
3. Market Development
The Company introduces the existing product in a new unfamiliar market. Since the company is not
known in this market/industry, the product may not be easily accepted in the market even though the
product may be technologically sound and proven in other industries. For example, a company9s pumps
may be well established in the dairy industry. However, they may not be easily accepted in the chemical
industry. Hence the market development is considered to have larger risk than product development
4. Diversification
New product and new market (Mission). Companies diversify to leverage their resources and
capabilities to attractive industries with much higher profitability. However, since both the product and
the market (Mission) are new, this option is the riskiest of the 4 options in the Ansoff9s Matrix.
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
42
2. Porter’s 4 Corners (https://www.youtube.com/watch?v=5OX10VR3yno)
Porter9s four corners model is a predictive tool designed by Michael Porter that helps in determining
a competitor9s course of action. Unlike other predictive models which predominantly rely on a
firm9s current strategy and capabilities to determine future strategy, Porter9s model additionally calls
for an understanding of what motivates the competitor. These are as follows: 1. Motivation 3 Drivers
This helps in determining competitor's action by understanding their goals (both strategic and tactical)
and their current position vis-愃-vis their goals. A wide gap between the two could mean the competitor
is highly likely to react to any external threat that comes in its way, whereas a narrower gap is likely
to produce a defensive strategy. Question to be answered here is: What is it that drives the competitor?
2. Motivation 3 Management Assumptions
The perceptions and assumptions the competitor has about itself and its industry would shape
strategy. This corner includes determining the competitor's perception of its strengths and
weaknesses, organization culture and their beliefs about competitor's goals. If the competitor thinks
highly of its competition and has a fair sense of industry forces, it is likely to be ready with plans to
counter any threats to its position. Question to be answered here is: What is competitor's assumption
about the industry, the competition, and its own capabilities?
3. Actions 3 strategy
A competitor's strategy determines how it competes in the market. However, there could be a
difference between the company's intended strategy (as stated in the annual report and interviews)
and its realized strategy (as is evident in its acquisitions, new product development, etc.). It is
therefore important here to determine the competitor's realized strategy and how they are
performing. If current strategy is yielding satisfactory results, it is safe to assume that the competitor
is likely to continue to operate in the same way. Questions to be answered here are: What is the
competitor doing and how successful is it in implementing its current strategy?
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
43
4. Actions 3 capabilities
This looks at a competitor's inherent ability to initiate or respond to external forces. Though it might
have the motivation and the drive to initiate a strategic action, its effectiveness is dependent on its
capabilities. Its strengths will also determine how the competitor is likely to respond to an external
threat. The questions to be answered here are: What are the strengths and weaknesses of the
competitor? Which areas is the competitor strong in?
3. PORTER'S VALUE CHAIN (https://www.youtube.com/watch?v=aeshYi6lj2Y)
The term 8Value Chain9 was used by Michael Porter in his book "Competitive Advantage: Creating
and Sustaining Superior Performance" (1985). The value chain analysis describes the activities the
organization performs and links them to the organizations competitive position.
•
Value chain analysis describes the activities within and around an organization and relates
them to an analysis of the competitive strength of the organization.
•
It evaluates which value each activity adds to the organization9s products or services.
•
Porter argues that the ability to perform activities and to manage the linkages between these
activities is a source of competitive advantage
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
44
There are four main areas of support activities: Procurement, Technology development (including R&D),
Human resource management, and Infrastructure (systems for planning, finance, quality, information
management etc.). The term‚ Margin implies that organizations realize a profit margin that depends on
their ability to manage the linkages between all activities in the value chain.
Primary Activities are:
a. Inbound Logistics - involve relationships with suppliers and include all the activities required to
receive, store, and disseminate inputs.
b. Operations - are all the activities required to transform inputs into outputs
c. Outbound Logistics - all the activities required to collect, store, and distribute the output.
d. Marketing and Sales - activities inform buyers about products and services, induce buyers to
purchase them, and facilitate their purchase
e. Service - includes all the activities required to keep the product or service working effectively for
the buyer after it is sold and delivered
Secondary Activities are:
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
45
a. Procurement - is the acquisition of inputs, or resources, for the firm.
b. Human Resource management - consists of all activities involved in recruiting, hiring, training,
developing, compensating and (if necessary) dismissing or laying off personnel.
c. Technological Development - pertains to the equipment, hardware, software, procedures, and
technical knowledge brought to bear in the firm's transformation of inputs into outputs.
d. Infrastructure - it consists of functions or departments such as accounting, legal, finance, planning,
public affairs, government relations, quality assurance and general management.
VRIO is an acronym for a four-question framework of value, rarity, imitability, and organization.
These four components are typically approached in the style of a decision tree:
1. Value
Do you offer a resource that adds value for customers? Are you able to exploit an opportunity or
neutralize competition with an internal capability?
No: You are at a competitive disadvantage and need to reassess your resources and capabilities to
uncover value.
Yes: If value is established, move on in your VRIO analysis to rarity.
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
46
2. Rarity
Do you control scarce resources or capabilities? Do you own something that9s hard to find yet in
demand?
No: You have value but lack rarity, putting your company in a position of competitive parity. Your
resources are valuable but common, which makes competing in the marketplace more challenging
(but not impossible). It9s recommended to go back one step and reassess.
Yes: With value and rarity identified, your next hurdle is imitability.
3. Imitability
Is it expensive to duplicate your organization9s resource or capability? Is it difficult to find an
equivalent substitute to compete with your offerings?
No: If your resource has value and rarity, but is affordable or easy to copy, you have a temporary
competitive advantage. It will require considerable effort to stay ahead of competitors and
differentiate your services4go back one step and reassess.
Yes: You offer something that9s valuable, rare, and hard to imitate4now the focus is on your
organization.
4. Organization
Guesstimates:
Guesstimate is an important part of many interview processes. These will be asked frequently
in your summer internship interviews as well as in your final placement process. For those
wanting to enter consulting, a guesstimate is going to be a very crucial part.
There are a few things that you should always remember solving guesstimate1. For a guesstimate problem there is no correct approach or an answer. Don9t aim to reach
close to the correct answer rather try to approach the problem in a way where you are
considering all the possible scenarios.
2. Ask as many questions as you want. Since guesstimate questions require assumption hence
make sure that you ask all the relevant questions to the interviewer before starting the
calculation part
3. Always convey the assumptions that you have made while solving the guesstimate
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
47
Data
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
48
Estimates the demand for Gold flake cigarettes in Mumbai?
Given that Gold flake9s market share is 20% in Delhi.
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)
lOMoARcPSD|23278329
49
Estimate the monthly residential electricity consumption in India
Downloaded by Sunny Bhushan (sunnyk4moti@gmail.com)