Consulting Frameworks
Guide
Basic Frameworks: “Special” Frameworks:
- Ansoff’s Matrix
- 4Ps & 7Ps - BCG Matrix
- 3Cs - Porter’s 5 Forces
- External vs Internal - McKinsey M&A Framework
- Qualitative vs Quantitative
- Costs vs Benefits
- PESTEL & SWOT
4Ps & 7Ps
3Cs
External & Internal
Pretty self-explanatory, both headings take care of the respective factors.
For example, Revenue external
internal
Qualitative & Quantitative
Examples of qualitative factors include: quality of business relations, level of customer confidence,
quality of management
Quantitative factors: revenue, cost, profit etc.
Costs vs Benefits
Helps to gauge whether an avenue is worth investing in or not. If the benefits outweigh the
costs, it is an investable avenue.
Else, one might be better of otherwise.
PESTEL & SWOT
Ansoff’s Matrix
- Best suited for growth strategy cases
- Helps understand the inherent risk in
growth scenarios
- Penetration: decreasing prices,
increasing promotional efforts,
acquiring a competitor
- Product development: R&D
investment, acquiring competitor’s
product, strategic partnerships-brand
- Market development: catering to a
diff segment, expansion
- Diversification: related & unrelated
BCG Matrix/ Growth Share Matrix
Helps to evaluate strategic position & potential
Dogs: Usually not worth the investment. Common
measures: divinvest, liquidate.
Cash Cows: Usually most profitable. Cash gained
from them can be used to support Stars for further
growth. Common measures: product development,
diversification
Stars: Usually have the most market share. Potential
to become cows, but can also become a dog in a
rapidly changing environment. Common measures:
market penetration & dev., product development.
Question Marks: Require close consideration as they
can go either way.
Porter’s Five Forces
Commonly used in market entry cases.
Rivalry: Inverse relation, competitors can undercut a
company.
New entrants: Easier is the entry, lesser bargaining power
the existing competitors have, hence, barriers are ideal for
survival.
Supplier: Power wrt how much they can drive the price up.
Fewer suppliers means more dependency.
Buyers: Similarly, this shows how much the buys can drive
the price own.
Substitutes: More the number of substitutes, weaker can the
competitive position get.
McKinsey M&A Framework
Helps in analyzing a firm’s organizational design.
Hard & Soft: Qualitative & Quantitative
Strategy: Clearly articulated, is long-term, helps to achieve
competitive advantage and is reinforced by strong vision,
mission and values
Structure: Organizational chart, shows accountability.
Systems: Processes and procedures that show how a company
functions daily.
Skills: Capabilities and competencies
Staff: How the employees will be hired, retained, retrenched.
includes what type and how many a company may need.
Styles: How the top management interact and manage.
Shared Values: Common set of values guiding an
organization.