Notes from hacking the case:

List of industries to know for trends:

1. Tech
2. Retail
3. CPG
4. Finance
5. Investment
6. Social impact/sustainability
7. Healthcare
8. Insurance
9. Pharma
10. Energy – solar, EV, wind
11. Construction
12. Mining
13. Education
14. Real estate
15. Food service/quick service restaurants
16. Food industry
17. Hospitality
18. Telecommunications
19. Forestry
20. Entertainment
21. Rail/air transport
Clarifying questions:
 One page just half for prompt and half for framework (don’t add anything else) – landscape
 Be confident in reading back the prompt! And say is my understanding correct?

Framework:
Usually 4 buckets (but generic and overused) make it specific to stand out
 Customer
 Competition
 Product
 Company

To make yourself stand out

 All buckets are relevant to objective
 MECE
 2-3 sub bullets under each
 Sub bullets also don’t overlap

FRAMEWORK BUCKETS

Market Attractiveness (go to market mainly)

 o Market size
o Market growth rate
o Average profit margins in the market
o Major trends / changes going on in the market?
o Are there new tech in the market?
o New regulations?
o Market developing or mature?
o Market converging with another market?

 Competitive landscape
o Who are the competitors
o How much market share does each player have?
o What products do comp sell?
o What capabilities do competitors have?
o What do some competitors do to differentiate themselves from the other players in the
market?

 Company attractiveness (for m&a mainly)/company capabilities (entering new market)

o What line of products does company offer?
o What ways do the products differentiate themselves from other products?
o How much market share does the company have?
o How profitable is the company?
o What distribution channels does the company have?
o What partnerships does the company have?
o how much buying power does the company have?
o What is the go-to-market strategy of the company?
o In what geo regions is the company based in?
o Is the company growing or declining?

 Customer segmentation and needs

o What are the diff customer segments
o What are the characteristics of each customer segment
o What are the needs / pref of each customer segment
o How are the customers changing in each customer segment
o How profitable is each customer segment

 Financial considerations (profit, revenue, cost)

o Profitable?
o What are diff revenue elements?
o Diff cost elements? (fixed, variable)
o How can we increase rev
o How can we dec costs
o What is the pricing strategy
o How long will it take to breakeven
o What is the cost of acquisition
o How to clear debt?
 o What is the financial exit-strategy of this business decision?

 Risks and mitigation

o What are the risks of business decision
o What is impact of such risks
o Can they be mitigated and how

 Synergies (between 2 companies or products)

o What are the possible revenue synergies
o Possible cost synergies?
o Realizable?
o How long will realizing these synergies take?
 Supply Chain
o Raw material manufacturer
o Product manufacturer
o Supplier/distributer
o Store

 Create own bucket

Cheat sheet:

Drivers for M&A

• Expansion into new market
• Access to new products/diversification of portfolio
• Rights to use different product or tech
• Industry disruption
• More control over product pricing/increase market share • Lessen competition
Risks Involved
• Regulatory issues with anti-trust laws
• Financial risks – consolidation to one set of books • Country shifts – tariffs or international
regulations • Currency shifts
• Lacking experience in new markets

• Synergies
• Revenue

• Distribution Network – can sell more

• New Markets – access/customers
• Cross-Selling – selling to existing customers with more types of products

• Costs – FC/VC

 Marketing – and other SG&A expenses

 PPE – example could be new tech/process means less time or equipment + less depreciation loss
annually
 Salaries

 Buyer Power – Favorable contracts

 Transpo/Logistics – Supply chain streamline/consolidated.

 Economies of Scale – efficiency and lower costs because of FC drop

 Storage

 Overhead lessen due to footprint consolidation

 Energy/fuel

People

 Consolidation of personnel and specializations

 Diversification of experience

Tech

 Software

Regulators and Solutions:

- Regulators block due to anti-trust laws/worry about monopoly

• Solutions:

- One of the companies can divest in a part of their portfolio

• Asset Buy – could only buy portions of a company to limit size

• Smaller purchase that meets our needs- like a new tech

• What would you divest from?

• Least profitable product

• Moving away from an outlier product

• Structuring a Transaction:

• (IMO) Project main office – set up a formal structure for tasks/work

• Work leads by function/workstream – manufacturing, R&D, finance, HR, product, IT, etc.

• Milestones – like timeframe and bottom-up fed info

• Oversee the feedback loop and keep stakeholders informed
Examples of buckets:
 Example 1 Market Entry case – should company A enter Market X?
o Bucket 1- market attractiveness
 What is the market size
 What is the market growth rate?
 What are the avg profit margins in the market
o Company A capabilities
 What capabilities can company A leverage to enter market X?
 Does company A have any experience related to market X
 Is company A able to handle the risks involved in entering the new market?
o Financial considerations
 Will entering market X be profitable?
 How long will it take to break even?
o Competitive landscape of market X
 Is the competitive landscape fragmented or concentrated?
 Do competitors in market X have differentiated capabilities or products?
 What are the barriers to entry?

 Example 2: Profitability case – what is causing company A to lose profits? What can be done to
address this issue?
o Financial considerations
 How have revenues changed for Company A?
 Quantity
 Price
 How have costs changed for company A
 Variable
 Fixed
o Competitive landscape
 Have competitors done anything differently?
 Have new competitors entered the market?
 Have competitors also lost profits?
o Customer segmentation and needs
 Have customer needs or preferences changed?
 Have customer purchasing behaviors changed?
 Has the number of customers decreased?
o Market trends
 Are there any new technologies affecting the market
 Are there any new regulations affecting the market?
 What other major trends are occurring in the market

 Example 3 – M&A – should company A acquire Company B?

o Attractiveness of company B
 How profitable is company B
 Does company B have any differentiated capabilities or products
  What is the brand name of company b like?
o Attractiveness of market company B is in
 What is the market size
 What is the market growth rate
 What are the average profit margins in the market
o Synergies
 What revenue synergies can be realized from the acquisition
 What cost synergies can be realized from the acquisition
o financial considerations
 is the acquisition of company B at a fair price?
 How long will it take to break even?
 What are the possible exit strategies for acquiring company B

Presenting your framework:

Virtual
 Ensure saying all 3 segments first
 Then say the sub bullets in each bucket (I have 2 that I’ll be going thru xyz)
 Spend 30 seconds on each bucket
 Then say “I’d like to touch base and ask if if this sounds good to you?”

Starting the case – two types: you lead (Bain, Accenture, Deloitte, LEK, etc.) or interviewer leads
(McKinsey)
 If led by you: interviewer is looking for:
o Ability to identify a high priority area to start the case
o The ability to communicate in a clear, concise, and confident way
 Once interviewer asks where you’d like to start
o State in which area of your framework you’d like to start and why (no wrong answer as
no info is given)
o If the area is not what the interviewer wants they’ll suggest an alternative area

Solving Quantitative Problems

 Market sizing (how big market is - $$ spent in a yr) or break even analysis
 Special cases are NPV (look at Wharton casebook)
 Interviewer is looking for
o General prob solving capabilities
o Ability to provide structure to quant prob
o Not making math mistakes
o Ability to communicate in a clear, concise, and confident way
 Market sizing
o Ask for time to structure and frame my approach
o During this time avoid using numbers and calculations yet
o After you structure, read out to interviewer and ask if it sounds good
o If it does start
  Breakeven analysis – calculates what would have to be true in order for you to achieve exactly 0
profits
o Profit = quantity*price – [quantity*variable costs + fixed costs]
 Profit = 0
o OR -> Quantity * (Price – VC) = FC

Answering Qualitative Business Questions:

 Interviewer is looking for
o Basic knowledge of business terms and principles
o Astute sharp business intuition
o Structured responses to qual business questions
o Ability to communicate in a clear, concise, and confident way
 Fundamentals of business knowledge
o Market share = revenue earned in a market/size of the market (or revenue earned by a
single firm) ($)
o Profit margin = profit ($)/Revenue ($)
 Generally companies want to invest more in higher margin products bc they
make more money off of them
o ROI = profit from investment /investment cost
o NPV = profit/hurdle or discount rate
 Barriers to entry – obstacles to enter a new market
o Examples – capital, tech knowledge/expertise, brand name, distribution channels,
economies of scale, technology, govt regulation, product differentiation
 VC & FC
o VC increase directly with increase in quantity of product
o FC = labor (salaries if they’re paid biweekly), manufacturing equipment/machines, rent,
utilities
 Fragmented vs concentrated market – they describe how competitive a market is
o Fragmented – composed of many different companies with no company having a
significant market share
 Low barriers to entry
o Concentrated – has only a few major players that collectively take up a large market
share (4 top players have 90% market share)
 High barriers to entry
 Supplier, manufacturer, distributor, and retailer
o Supplier – company that sells raw materials to another company who then uses it to
create a product to sell
o Manufacturer – sells the final product
o Distributor – company that transports the final products to places where the product
can be sold
o Retailers – sell the product to customers
o Vertical integration is a strategy that allows a company to streamline its operations by
taking direct ownership of various stages of its production process
 Pricing strategy:
o 1st way to price – determine how much a customer is willing to pay for the product
(done thru customer surveys and focus groups – most straight forward)
o 2nd way to price – look at what price competitors are selling their products for and sell
within that range
o 3rd way – look at how much it costs to produce that product. Then assign a profit margin
to that product and set the price accordingly. Guarantees that the product will have a
certain profit margin when sold. Doesn’t consider customers WTP
 Buyer power/purchasing power:
o It is a qualitative measure of how much power a company has in setting the price of raw
materials or services that it purchases from supplier
o Depends on how many sellers there are in the market
o Buyer power is high/strong if buyers are more concentrated than sellers
 Reasons for making mergers & acquisitions
o Current company is lacking a particular product or offering in their portfolio (may be
cheaper than to develop from scratch)
o Synergies – occurs when the interaction of two parts (2 companies) produce a combined
positive effect or outcome that is greater than the sum of the 2 individual parts
 Can be broken down into revenue and cost synergies
 Revenue: having access to a new customer base or market, being able
to cross-sell products to existing customers, and sharing overlapping
infrastructure/distribution channels
 Cost: headcount reduction from eliminating redundancies, reduced
overhead or fixed costs from consolidating functions (hr, marketing,
etc), and increased buyer power
o Current company sees a smaller high growth competitor as a threat – buy in order to
eliminate threat
o Company may purchase another to diversity portfolio
 Private equity
o Firms that have a lot of money and invest/purchase others for the sake of getting an ROI
o 1 way to getting ROI – purchasing companies that aren’t performing well or not
profitable and turn them around and sell at higher cost
o 2nd way to get ROI – purchase a company that would create synergies with the rest of
their portfolio (could increase overall portfolio value in long run
o MAKE SURE to ask what strategy the PE firm is looking to use to get an ROI – will dictate
what qualities you need to look for in the companies that may get bought out
 Price sensitivity – measures the change in quantity of a product that customer will purchase if
the price changes
o Highly sensitive – even if a small increase in price, quantity lowers and vice versa
 Ways to increase revenue – organically or inorganically
o Organic revenue growth – when company achieves thru its own efforts, internal to the
company
 Increasing rev from existing products (inc quantity or price)
 Selling entirely new products
o Inorganic – growth thru M&A (externally)
 Ways to decrease costs
o Reducing variable costs of FC
 o FC are more difficult bc they’re determined in the longer run and have contracts or
locked-in costs that last for many years
 Can be reduced by renegotiating contracts (ex cost of warehouse)
o VC – can switch to cheaper supplier, search for substitutes of raw materials, can use less
raw material in each product (could affect quality), renegotiate price of raw material
 Economies of scale
o Advantage that a company gets in terms of buyer power as it produces and sells more
and more product. As they sell more and more they have more buyer power from
suppliers and allows the firm to purchase VC at lower price than competitors. This
allows them to price it at a lower price as well which allows them to sell more product,
etc (cycle is called achieving economies of scale)
o Achieving max econ of sales is when the suppliers are no longer able to reduce the costs
of raw materials that they can sell bc they need to profit

How to answer qualitative business questions/brainstorms

 Take 15 seconds to structure if needed and then use the mini frameworks:
o Internal/external
o Short term/long term
o Economic/non economic
o Quantitative/qualitative
 Be creative! Think of 4-5 diff things depending on the question

Delivering Conclusion
 Criteria
o Start with confident assertive recommendation
o Structure
o Risks and other considerations
o Next steps
 Interviewer is looking for
o Ability to synthesize all info discussed and pull to key takeaways
o Ability to deliver a firm rec backed by facts, acumen, judgement
o Ability to communicate in clear confident concise way