Question on Structuring Profitability and Investment Frameworks

Question

Hi community,

I have a question about the following case:

Our client, a printing company specializing in university ID cards in Lebanon, has seen a recent decline in profits. They need help identifying the root causes and developing strategies to move forward.

When building my framework, I broke revenue down into (Price x Volume). My question is: can external factors be a sub-category under volume?

For example:

Volume
- Internal Factors
- External Factors (e.g., macro trends, competition, substitutes)

Or should I treat "External Factors" as a completely separate category? I want to make sure my framework is MECE, as this was an issue in a previous interview.

Also, Do i need to include Strategic Options & Growth Levers as a 3rd bucket or should I tell the interviewer, I will look into it after I deidentify the root causes of the issue?

Second Question:

For an investment opportunity case, I structured my framework into three parts: market, financials, and feasibility. Under "Feasibility," I included capabilities, operations, and an implementation timeline.

However, someone I was practicing with told me that "Feasibility" is the wrong term because it overlaps with financials. They suggested I should replace it with "Implementation." Is this correct?

Thanks.

Answer 1

Hi there,

On the first:

Great that you picked up on the mistake most candidates make when using the profit equation as a case structure. In short, the answer is no - I wouldn't put external under volume. One reason might be that the change in the market might have to do with pricing, which then means the external area shouldn't be reflected in volume.

If anything, I would go for a internal/external structure, though presented in a more creative way that the framework like naming used now. In the 'internal' component you could look still at the profit equation, whereas in the 'external' one you could analyse the market, competition, customer trends.

On the second:

You are sort of going in the right direction, but because you're describing it high-level, I can't actually give you very useful feedback. I would challenge first of all the structure that you are providing, rather than the labelling of the last area. I would go for something that is more operational and likely to lead the client to an answer.

If you have any other questions, feel free to drop me a line directly.

Best,
Cristian

Answer 2

Hi there,

I would be happy to share my thoughts on your questions:

First of all, I would strongly advise you to approach profitability problem case studies in a systematic way. That is, you first need to understand which factor within the profit tree is causing profits to decline before brainstorming potential root causes. Regarding your answer: no, do not allocate external factors within an internal factor.
Moreover, contrary to what other coaches have said, thinking in terms of factors or dimensions is not meaningful for almost all consulting firms except McKinsey, since they ask for an approach. Instead, you need to think about the steps or analyses to answer the question.
Lastly, I would strongly advise you to consider working with an experienced coach like me on your structuring skills. I developed the "Case Structuring Program" to help exactly such candidates like you who struggle with case study structures.

You can find more on this topic here: How to succeed in the final interview round.

If you would like a more detailed discussion on how to best prepare your application files, for your upcoming pre-interview assessments and/or interviews, please don't hesitate to contact me directly.

Best,

Hagen