• Examine company profitability by segment — How much do they purchase? — At what price?
Competitors
• Identify major competitors — Traditional — Unexpected substitutes
• Buyers’ propensity to switch
Value Chain
Suppliers
Design and Engineering
Manufacturing Marketing
Sales
Distribution
Service
•Cost •Quality •Cycle Time •Technology
• Organizational skills
Is the candidate good at organizing the information provided? Is the candidate good at developing a framework for analyzing the information? Is the candidate stating assumptions clearly?
structure
network
•Satisfaction
•Retention/attrition •Delivery/batch levels
levels
sizes
•Volume vs. profit
Financial Analysis
• Estimate Future Cash Flow – Revenues - Costs
• Estimate Discount Rates – Look at comparables
• Attain Net Present Value (NPV) – Discount future cash flows at appropriate discount rate
• Consider Other Synergies – Reasons for go ahead despite negative NPV
• Number and size of suppliers • Switching costs/product
differentiation • Availability of substitutes • Possibility of forward
integration
Market Rivalry
• Strategic thinking skills
Is the candidate comfortable discussing the multifunctional aspects of the case? Is the candidate examining the organizational and cultural issues as well as the functional and strategic? Is the candidate approaching the problem at the right level of detail?
• Impact of channel strategies on market positioning
The “Four Ps”
Product
Place (Distribution)
Promotion
Price
• What are the product’s differentiating attributes?
• Competitor’s pricing
) ( Quantity —
Fixed
• Customer segmentation — New/existing — Loyal/ switchers
• Channel restrictions or temporary disturbances
• Changing consumer demands
•Process
•Channels
(Throughput,
general flow,
economies of
scale, yield, best
practice, utilization,
asset base,
technology)
•Size of sale force •Margins
•Response time
• Number and size of competitors
• Industry growth rate • Product differentiation factors • Industry margins/pricing
Buyer Power
• Significance of the purchase relative to cost structure
Brain Teasers
• Know Some Basic Statistics – US Population: 250 mm – Households: 100 mm – Employed: 60% – Married: 60% – Ave Income: 30k per year – Income Distribution: $0-25k: 30%, $25-75K: 55%, $75k+:15% – Education: High School - 75%, Bachelors degree - 20% (Note: All figures are estimates)
Recruiters look for three primary cte has
aptitude for
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• What are the competitor’s strengths and weaknesses — Profits — Costs
• Investigate market share
Channels
• Identify relative channel leverage — Sources of advantage — Sustainability
• Switching costs • Purchase volume • Threat of backward
integration
Substitutes
• Relative price/value of the substitute compared to industry’s product
• Cost of switching to substitute
• Why does the consumer purchase this product?
• How is the product distributed to consumers?
• What new methods of distribution are coming available?
• What advertising medium is used to sell the product?
• Estimate the competitor’s cost structure
• Understand trends in cost structures
Customers
• Segment the company’s customer base — New/existing — Loyal/ switchers
•Logistics
•Inventory turns •Enabling
•Agency systems •Level of support technology
vs. in-house •Logistics network •Labor
•Commission •Structure of requirements
The Cost-Revenue Model
Profit
Revenue
Cost
( Price
X
• Price discrimination
• Changes in pricing structure
• Viability of pricing over time
• Discounts or couponing
• What is the most effective method of “getting the word out”?
• How is this product priced?
• How are its competitors priced?
• Unique packaging • “Superior cleaning
• Retail placement — aisle-end displays
• New media?
• Value pricing/ “Every Day Low Price”
• Premium pricing • Price discrimination
How effective is this product’s marketing campaign?
Key Questions
Is the candidate relaxed and confident?
• Communication skills
Is the candidate engaging? Is the candidate a good listener? Is the candidate asking insightful, clarifying questions?