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External factors for increasing input/ product prices

approaching a case Case structure and frameworks Framework
Neue Antwort am 31. Aug. 2022
5 Antworten
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Anonym A fragte am 18. Aug. 2022

Hi, I want to list possible external factors affecting price hikes for case interviews.

If I list exchange rate and inflation as two separated factors, would my structure still be MECE?

 

Thanks

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Ian
Experte
Content Creator
antwortete am 19. Aug. 2022
#1 BCG coach | MBB | Tier 2 | Digital, Tech, Platinion | 100% personal success rate (8/8) | 95% candidate success rate

Hi there,

This isn't even close to MECE (sorry).

You've listed two specific small ideas…not a hollistic approach to the problem…

MECE isn't about listing a bunch of things. Rather it's about segmenting the problem.

I do strongly recommend a coaching session to really take your structuring to the next level - it's very very hard to go from good to great in this category without help. This is especially true if you're trying to practice non-classic case questions.

HOW TO FRAMEWORK

Now, in terms of tips, #1 most important thing is to be objective-driven. Not hypothesis-driven, but objective driven. Remember that there are 2 objectives: 1) the objective of the case (what is the question I'm trying to solve) and 2) The objective of the client (what are their needs, wants, desires. What does "good" look like)

Furthermore, If there's anything to remember in this process, is that cases don't exist just because. They have come about because of a real need to simulate the world you will be in when you are hopefully hired. As such, remember that they are a simplified version of what we do, and they test you in those areas.

As such, remember that a framework is a guide, not a mandate. In the real-world, we do not go into a client and say "right, we have a framework that says we need to look at x, y, and z and that's exactly what we're going to do". Rather, we come in with a view, a hypothesis, a plan of attack. The moment this view is created, it's wrong! Same with your framework. The point is that it gives us and you a starting point. We can say "right, part 1 of framework is around this. Let's dig around and see if it helps us get to the answer". If it does, great, we go further (but specific elements of it will certainly be wrong). If it doesn't, we move on.

So, you should absolutely be prepared to either enter a new piece of your framework or change your framework altogether as new information comes in. How do you handle this?

Well, first, you can really just articulate what you're doing. You can say "Oh, interesting, so if looks like we have some information on y. I don't want to forget about x, but let's see what y brings us first. Ok, looks like it's about..." Then, when you've "finished" with y, you can check to see if there's any info on x. If there isn't, move to z :)

Second, you can re-summarize/iterate where you are. This is especially useful if you have the change the entire framework. Say "Ok, so it looks like now we actually need to look a 3 key things to solve this"

So, in summary, learn your frameworks, use the ones you like, add/remove to them if the specific case calls for it, and always be prepared to be wrong. Focus rather on having a view, refering back to the initial view to see what is still there and where you need to dive into next to solve the problem.

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Emily
Experte
Content Creator
antwortete am 18. Aug. 2022
Ex McKinsey EM & interviewer (5 yrs) USA & UK| Coached / interviewed 300 +|Free 15 min intro| Stanford MBA|Non-trad

Hi there,

It's quite hard to tell without knowing what the case is and what other buckets you have in your framework. This is why some of the case frameworks are helpful starting points for learning to case, but you need to be able to adapt them to the particular question that is being asked. 

Exchange rate and inflation are both financial factors. If the question contains questions broader than finance then they should be grouped together. If the question is about external finance factors then there are could be many other factors at play. Without knowing the question it's impossible to say. 

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Lucie
Experte
Content Creator
antwortete am 18. Aug. 2022
10+yrs recruiting & BCG Project leader

Hi there, 

Agree with Emily, it is hard to say without knowing the case. I wouldn't be as worried about MECE, rather think what is really moving the needle in the case. 

If you need practice with pricing cases, feel free to reach out, I am pricing expert at BCG. 

Good luck!

Lucie

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Udayan
Experte
Content Creator
antwortete am 21. Aug. 2022
Top rated Case & PEI coach/Multiple real offers/McKinsey EM in New York /12 years recruiting experience

There are some great answers here already. The one thing I would add is from an economics perspective, inflation and exchange rate are directly correlated - higher inflation leads to currency depreciation all other factors being equal. So in that sense keeping the two apart would not be MECE

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Pedro
Experte
antwortete am 31. Aug. 2022
30% off in April 2024 | Bain | EY-Parthenon | Roland Berger | Market Sizing | DARDEN MBA

You have to put a structure on this.

Prices can increase because there's an increase in cost drivers, or because there's higher relative scarcity driving up prices (i.e., more demand or lower offer).

Then you have to deep dive on each of these three options. But you have to think about these on a specific problem, not in a generic way (otherwise you'll have to memorize hundreds of options. Case preparation is about training your structured problem solving skills, not about training your memory).

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