assignment

Lesson 2: Fundamentals of Organizational Analysis

IBUS 718: Consulting & Organizational Development in the Multinational Corporation

Quantitative Assessment • Quantitative Test • Estimation Questions

Hypothetical Situation Case Interviews • Candidate-Led Case Interview • Interviewer-Led Case Interview • Written Case Interview • Group Case Interview • Presentation Case Interview

Source: Victor Cheng, Case Interview Secrets

Types of Cases

• Precise arithmetic with large numbers

e.g. Market of 2 million buyers, market share of 15%, average revenue per buyer of $300 à What is estimated total revenue

Source: Victor Cheng, Case Interview Secrets

• Precise arithmetic with large numbers • Rounding numbers intelligently

e.g. We need a market of at least $1.5 billion 54 million buyers, 17.5% market share, $300 ASP

54 million x 17.5% x $300

Source: Victor Cheng, Case Interview Secrets

• Precise arithmetic with large numbers • Rounding numbers intelligently

e.g. We need a market of at least $1.5 billion 54 million buyers, 17.5% market share, $300 ASP

50 million x 17.5% x $300

Source: Victor Cheng, Case Interview Secrets

• Precise arithmetic with large numbers • Rounding numbers intelligently

e.g. We need a market of at least $1.5 billion 54 million buyers, 17.5% market share, $300 ASP

50 million x 20% x $300

Source: Victor Cheng, Case Interview Secrets

• Precise arithmetic with large numbers • Rounding numbers intelligently

e.g. We need a market of at least $1.5 billion 50 million x 20% x $300 = $3 billion 54 million x 17.5% x $300 = $2.835 billion We were too high by $165 million or ~5.8%

Source: Victor Cheng, Case Interview Secrets

Big Picture Estimates How many gallons (or litres) of gasoline does a typical gas station pump each week?

• Finding a Proxy • Identifying how your proxy is imperfect • Segmenting estimates to minimize proxy imperfections • Solving sub-estimates via assumptions

Source: Victor Cheng, Case Interview Secrets

Hypothesis Issues tree / framework Drill-down analysis Synthesis

Hypothesis 5 minute

rule

Hypothesis is true if…

Condition #1

Condition #2

Condition #3

Sub-condition #1A

Sub-condition #1B

Sub-condition #1C

Sub-condition #2A

Sub-condition #2B

Sub-condition #2C

Sub-condition #3A

Sub-condition #3B

Sub-condition #3C

Issue Tree

Etc.

• State Hypothesis • MECE

• Conclusive

Profit

Revenue

Cost

Price/Unit

Units Sold

Example: Profit Framework

Cost/Unit

Units Sold

Fixed Cost/Unit

Variable Cost/Unit

Hypothesis is true if…

Customer

Example: Business Situation Framework

Product

Company

Competition

• Who is the customer (segmented) • What does each customer segment want? • Price sensitivity • Distribution channel preference by segment

• Nature of the product (value proposition) • Commodity of differentiable good? • Complementary goods and services? • Substitutes? • Life cycle • Packaging

• Capabilities and expertise • Distribution channels • Cost structure (fixed v. variable) • Investment costs if applicable • Intangibles • Financial situation • Organizational structure

• Competitor market share concentration • Competitor behaviors • Best practices (are they doing something we are not?) • Barriers to entry • Cupplier concentration • Regulatory environment

Source: Victor Cheng, Case Interview Secrets

Customer

Example: M&A Framework

Product

Company

Competition

Customer

Product

Company

Competition

Customer

Product

Company

Competition

Company A + Company B = Merged Company

Overall Market

Market Share

Segment

Prioritize

Example: Capacity Framework (Supply/Demand)

Industry Supply

Effect on Prices

Possible Benefits

Productivity

Real Costs

Opportunity Costs

Alternatives

Demand Supply Cost of Expansion

Image: Alex Snow Source: Victor Cheng, Case Interview Secrets

• Start with branch that eliminates most uncertainty • Quantitative & Qualitative (~ 70/30) • Don’t stop drilling down a branch until you reach a

conclusion

• Be efficient – get to the minimally necessary data • Use diagrams to take notes • Use the logic to communicate with the client

Drill Down

Synthesis

Action-oriented recommendation/conclusion Supporting point 1 Supporting point 2 Supporting point 3 Restate recommendation/conclusion

A company wants to launch a new product.

If it does (at a cost of $5 million), there is a 20% chance that annual operating profits (not counting launching costs) will be $4 million, 50% chances of $6 million, 25% of $8 million and 5% of $17.5 million.

On the other hand, if the company sticks to its current product portfolio, there is 60% probability of annual operating profits of $1.5 million, and 40% probability of annual operating profits of $3 million.

They hire you as a highly paid consultant to advise them. In about 3- 8 sentences answer the following... Should they launch the new product or not? Why or why not?

Market Accessiblity

M ar

ke t G

ro w

th (A

ttr ac

tiv en

es s)

Low

Lo w

H ig h

High

? Question Marks

Cash CowsDogs

Competitive Advantage, Value Proposition

BCG Growth-Share Matrix

Selectively Invest Invest

Stars

Divest Protect

Market Share

Crossing the Chasm

Business Process Modeling

Source: Wikipedia

Summary of this Lesson In this lesson, you focused on the fundamentals of organizational analysis and exercised a number of tools used by consultants including the following: - Frameworks in general - Porter’s 5 forces - BCG Matrix - Crossing the Chasm - Blue Ocean Strategy - Ansoft Matrix

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