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The 4C Framework is a good framework to structure a firm's positioning

Get a broad overview of a business unit and its market with the 4C Framework

The 4C Framework is composed of four elements: Customer, Competition, Cost and Capabilities. The structure is useful to get a better understanding of the client and important during your case interview. While the former 2 provide information of external market conditions, the last 2 provide internal information about the company. The framework belongs to the basic tools, which serve as general roadmap and reminder of the major aspects to cover. The 3C Framework – Customer, Competition and Company is very similar except that the internal aspects of cost and capabilities are combined within the company.

Think about the 4 Cs when the case is about analyzing a market, entering a new market or introducing a new product

Within the first segment, the focus lies on the customer of the company

It is important to realize that the customer of the firm is not necessarily the end customer who buys the product. To find out more about the customer, questions should concentrate on:

  • Market size in terms of revenue
  • Growth
  • Segmentation by geography, products and/or other segments
  • Customer segmentation and types of customers
  • Attractiveness in terms of revenue and expected growth
  • Special needs and wishes
  • Loyalty
  • Distribution channels

The second part of the analysis should focus on the competition

It is important to understand the market position of the competitors as well as how the competition differentiates itself from the client's company.

  • Competitive position portrayed through the share and relative share of the market
  • Growth of the last years and expected growth
  • Fragmentation
  • Performance, for example profitability, relatively to ours
  • Dynamics of new entrants
  • Other trends

Moving to the third dimension - costs - the view changes from an external to an internal view

Here, we compare our client’s cost structure with the competition’s cost structure and try to reduce our costs if certain components of competition costs are lower.

  • Relative cost position, cost advantage compared to competition
  • Profitability by customers, product lines, geography
  • Economies of scale
  • Introduction of best practices
  • Exiting unprofitable areas
  • Reorganization of business units

The fourth and last area deals with capabilities

If we have a better understanding of the resources of a company, we are able to judge more precisely what kind of strategies a company can apply to boost its performance. Furthermore, we can decide if a company should rather make something by itself (organic) or buy the competencies from outside (inorganic - e.g., buying a new firm). Following are some examples of company's capabilities:

  • Core competencies
  • Human Resources
  • Technology
  • Value for the customers
  • Financial resources

Read a case using the Customer, Competition, Cost and Capabilities Framework.

Key takeaways for the 4C Framework

  • 4 elements of interest: Customer, Competition, Cost and Capabilities.
  • Customer and Competition provide an external view.
  • Cost and Capabilities provide an internal view.
  • Useful for market analysis, market entry and introduction of a new product.
3 Comment(s)
November 04, 2017 08:10 am -

One other C could be Commodity (Product).
Information like- how does the product meets the needs - what it does, why it is useful, basically how it targets the job to be done.

Then, whether the product has certain competitive advantage (differentiated or commoditized)

Whether there are complementary products that support the sales of the product or substitutes that curtail the sales.
Finally how long it takes to develop the product and bring it to the market (pharma, electronics etc.) This will help us to assert -when to enter the market.

June 25, 2017 05:03 pm -

I think in comparison with Porter's Five Forces, the 4C approach is a better suit for the company that has already entered the field they wanna crack in.

February 23, 2017 05:20 am - Anonymous


Related consulting question(s)
Someone gave the best answer on Jul 14, 2016 - 3 answers

As you describe it, this is the longest version of this case format; normally too long for an oral interview, so it's super important to listen whether the question is about if (the client should ente... (more)

Someone updated the best answer on Apr 17, 2017 - 1 answer

Hi there, I would start by asking some general questions to have a better feeling on the case: 1) Does our client provides this new service elsewhere? If not, does our client already has the cap... (more)

Francesco updated the best answer on Mar 27, 2018 - 1 answer
#1 Expert for coaching sessions (2.100+) | Ex BCG | 1.000+ reviews with 100% recommendation rate

Hi Elisey, I would personally not recommend to use a single framework for all the so-called business situations (M&A, Entry, New product, Operations etc). Although this would help to more easil... (more)

Achyut gave the best answer on Aug 15, 2016 - 2 answers

If I understand your questions correctly, you are trying to figure out the difference between analyzing the overall market (or an industry), vs. the subsections of the market that a particular company... (more)

Vlad gave the best answer on Feb 26, 2018 - 4 answers
McKinsey / Accenture / Got all BIG3 offers / More than 300 real MBB cases / Harvard Business School

Hi, I would start with either market sizing or with profitability cases since they are much easier: 1) In market sizing cases I would try to understand the basic approach: How to structure... (more)

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