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Is it fair to ask about the value chain as a clarifying question in the beginning of the case?

Someone asked on Oct 15, 2018 - 4 answers

I am usually always able to come up with more ideas to brainstorming questions if I know the value chain of the company. Is it fair to ask about it before you draw out your structure?

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Francesco replied on Oct 15, 2018
#1 Expert for coaching sessions (2.000+) | Ex BCG | 1.000+ reviews with 100% recommendation rate

Hi Anonymous,

in general you can ask three type of questions at the beginning of the case:

  1. Those to understand how the business model of the client works
  2. Clarification of all the elements that were not clear to you in the prompt
  3. Goal clarification and constraints of the client to achieve it

Theoretically, the value chain can help you to understand better the first point, but most of the time an analysis of the full value chain is not strictly necessary for that. Moreover, a value chain analysis is usually already present in a good cost or operation structure.

As a consequence, unless you are completely unfamiliar with the industry/market, I would recommend to consider it as part of your structure later on, and ask at the beginning only what strictly required to understand the business model.

Best,
Francesco

Vlad replied on Oct 15, 2018
McKinsey / Accenture / Got all BIG3 offers / More than 300 real MBB cases / Harvard Business School

Hi,

You definitely can

You would recommend asking the following questions:

1) Clarify the business model. Ask how the company actually makes the money. For several reasons:

  1. Even if you think you understand the business model, you need to make sure that you understand it correctly.
  2. Some cases have pitfalls related to a business model (re profitability cases with several revenue streams
  3. You need to understand the revenue streams to make a proper structure. E.g. if the case is about oil&gas company which revenues are declining, ask if it is Up / mid / down-stream problem. In this case, defining a revenue stream is critical to setting up the right structure. (At the end of the day it may be the decline of snack sales at the gas stations:). In case of telecom company it may be the problem of the core business (wireless) or non-core (landlines, internet)

2) Clarify the objective. Here make sure that your goal is:

  • Measurable
  • Has a time-framed
  • Has / has no limitations

e.g. Should I invest 100k in this business for 1 year if I want to get 15% return?

3) Ask the questions that will help you build a relevant structure and remove ambiguity.

E.g. in the market entry case ask whether we are entering the country organically or non-organically

!!! Finally - do the recap after asking the clarifying questions. Although most of the case books suggest to do it immediately at the beginning of the interview, it makes much more sense to clarify the situation first and then to make sure that you understand everything correctly.

Best!

Benjamin replied on Oct 15, 2018
ex-Manager - Natural and challenging teacher - Taylor case solving, no framework

HI,

It's crucial that you understand the business your will work on, and value chain is indeed a good way to proceed.
So it can ben done either in clarification question or in a dedicated section of your structure : this will depend on how specific / exotic is the business or vague is the initial case statement


Best
Benjamin

Elias
Expert
replied on Oct 15, 2018
Experienced strategy consultant, now running own consulting business

As usual: It depends.

If it's some relatively exotic industry, that's ok. Like prosthetics, or some strange manufacturing ingredients or what not. (spitballing here...)

But if it's a bread-and-butter industry (like bakeries or dairy ;-) ) you should be able to come up with a relatively straightforward value chain configuration on your own.

Related BootCamp article(s)

The Value Chain

The Value Chain - as e.g. by Porter - is a classic framework to structure the activities of a business and add value to products by transforming resources.

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