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How many levels to original issue tree?

Chris asked on Mar 28, 2017
Prepping McK, Bain & BCG (2nd round)

Hi,

When creating the first issue tree/structure in a case, I'm struggling to determine how many levels deep to go.

Listening to LOMS, for instance, I feel like applicants name the 3-4 domains they want to investigate and then just start asking questions about each one, without having formulated underlying levels upfront. Perhaps a bit less structured, but seems to allow for more unconstrained thinking.

Any thoughts? Thanks,

Chris

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Vlad replied on Mar 31, 2017
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Hi!

Completely agree with Guido. I would also add that you can formulate subpoints as hypothesis.

For example if you are having a PE (private equity) case, you should do the following:

  1. Make classic structure (market, company, competitors, feasibility of exit)
  2. Make subpoints (e.g. in market: size, growth rates, profitability, segmentation, etc)
  3. Present your 1st level Hypothesis:
  • - "In order to understand whether we should invest in Company A, I would like to look at: Market attractiveness, Company Attractiveness, Competition Intensity, Feasibility of exit"
  1. Present the main 2nd level Hypothesis:
  • "In the market I would like to make sure that the market is big enough and growing;
  • In the company I would like to find additional opportunities for growth;
  • In competition I would like to check that the market is fragmented enough;
  • Finally i would like to check if we have potential buyers and can achieve desired exit multiples"

Good luck!

Guido
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replied on Mar 28, 2017
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Hi Chris,

I think the approach would really depend by the case.

As a general rule of thumbs I would suggest you to apply a 2-level structure for general/classic cases and a more detailed one for market sizing.

For general/classic cases you should state your initial hypothesis and list the area (1st-level) you need to address to answer to that hypothesis.Then for each area I would list the subpoints I want to analyze (2nd-level).

I hope that answers your question.

Best,

Guido

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