Online travel booking

Hi!

It depends very much on the industry. In some cases (Growth strategy) I will use a broad structure, in others (e.g. “how to increase the excessive luggage revenues for an Airline”) I will use P, Q and the Process. Here is the broad structure that you can adapt to your industry:

Analyze the market:

• Size and growth rates
• Segments (geographical, customer, product)
• Distributors / Suppliers
• Regulation
• Key market trends

Analyze the competitors:

• Market shares, growth rates, profits
• Product / customer / geographical mix
• Products (Value proposition)
• Unit economics (Value proposition vs. price vs. costs)
• Key capabilities (Distribution, supply, assets, knowledge, etc)

Analyze our company:

• Market share, growth rates, profit
• Product / customer / geographical mix
• Products (Value proposition)
• Unit economics (Value proposition vs. price vs. costs)
• Key capabilities (Distribution, supply, assets, knowledge, etc)

How to increase revenues:

• How to increase the scope: Product / customer scope, geographical scope
• How to improve value proposition (How to fix your weaknesses and improve your strengths; Potential increase in price and volumes)
• How to answer the competitors (Unique or hard to build property and contracts; Customers / suppliers / complements with lock-in; Reputation and relationships; Organizational capabilities; Product features and know-how)
• Other benefits of scale (Spreading Fixed costs, Change in technology, Bragaining power)

Best!

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 easily remember the framework, it would make more difficult to present a customized structure when the interviewer asks the initial question. Moreover, since every business situations has some peculiar key elements (eg how to enter in a market-entry case, price valuation in M&A, etc), this could lead to completely miss one core bucket.

Based on my experience, it thus make sense to make the extra effort to learn 3-4 different structures for business situations (potentially with some elements in common), and be able to present from the beginning something ad hoc when needed.

Moving to the framework per se, using as an example market entry, this is how I would structure it:

1) Goal clarification. It is always good to start with the end in mind – thus what is the specific reason why you want to enter the market? Is it revenues, profits or specific synergies?

2) Industry. There are two macrovariables here.

• Key industry numbers/facts. This includes for the market and potential subsegments the following
  • Growth
  • Size
  • Barriers to entry
• Key industry players. This includes:
  • Customers segmentation
  • Competition
  • Occasionally for some cases: suppliers and substitutes.

You should present this area connecting with the goal, and not purely listing the elements to analyse as if it was a laundry list. The best way to do so is explain how a certain variable will help you to achieve you goal. Eg, if your goal is to increase revenues, don’t simply say “I want to look at growth, size and barriers”, rather “I want to look at growth and size – this will tell me if the market has the potential to provide enough revenues for our client. I would also like to check the barriers, to understand which are the obstacles in entering such a market and thus increase revenues”.

3) Company - Target objective feasibility. Here you want to check the fit between the client and the selected industries.

• Can our specific client reach its objective in the selected market (eg profits, revenues, market share, etc)?
• Are there positive or negative synergies in such industry?

In the first point, you will probably have to go through a profitability/revenue/cost framework, to calculate the effective result.

4) Best way to enter. Once you know the industry is attractive and you can reach you goal, you should consider the entry options.

• Which are the possible ways to enter the market? Usually you should consider (i) starting from scratch; (ii) M&A; (iii) Joint Venture or licencing
• Which option meets better our capabilities to enter the market? Each specific way to enter will require some different capabilities. If you start from scratch you may need skilled people in all the phases of the value chain; if you buy another company you may need less people, but more upfront capital, etc.

5) Risks and next steps. What are the major elements that we should further analyse based on the previous points (eg regulator decision, unexpected competitor reactions, potential wrong pricing in the new market, etc)?

This would include all important market metrics, presenting barriers to entry into the industry. I would not consider the price or the product in the first or second level for a market entry, but rather as a possible third level once reached step 3, when we have to understand if/how we can meet the client's goal.

Hope this helps,

Francesco

Hi,

1) You proactively ask in the beginning, even before drawing the structure (something like "What kind of products / revenue sources do we have) and then split the structure into price, qty, product mix. Distribution and customers I usually check within qty part

2) Not sure if I understand the question. Your company does not necessarily replicate industry trend, so you have to look at it separately

Hi Kay,

this is indeed one of the fundamental things that you need to learn in order to rigorously disaggregate the value drivers of a business. The driver tree allows you to identify the numerical drivers and sub-drivers of profits. The qualitative elements (such as consumer demand, market structure, company operations, etc.) then have to be mapped to the sub-branches of the tree!

Hence, your analysis has two steps. Imagine you want to run a diagnostic on why profits have fallen. First you need to identify the numerical driver of the problem (e.g., customer base is shrinking). This gives you an understanding of the WHAT. The second step is the understanding of the WHY! To do this, you have to examine the qualitative elements that link to the "number of customers"-sub-branch in your driver tree (e.g., competitive situation, market entries, new substitutes, relative price point, customer preferences, product/service properties vs. competition, etc.)

You can think of these qualitative elements as the typical business situation framework elements (see V. Cheng et al.) - but here, they are not hanging in the air, but they are embedded in a rigorous thinking frame which emerges from the disaggregation of value drivers and linking it to qualitative reasons.

Cheers, Sidi

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 market sizing case
• Key tools (Assumptions, Households, using personal experience, adjustments, age groups, Income split via 80/20, peak / off-peak calculations, replacement rate, using size of the area to calculate markets, calculating adjacent markets, sanity checks, etc).
• How to do math in the case interview

2) In Profitability cases, I would learn

• How to ask clarifying questions
• How to structure profitability cases
• How to work with data (Comparing with competitors, segmentation, historical data)
• How to answer the questions on creativity
• How to provide recommendations

3) Then I will switch to Market context cases (Market Entry, New product, Acquisition, etc). In addition, I would learn how:

• Structure market context questions
• How to analyze graphs and tables

4) After that I would look at other case types: Operational math problem (e.g. Should we increase the speed of an elevator or just buy a second one? How should we reduce the queues? Etc.), Cost Cutting, Valuation, Private equity due diligence, Synergies, etc.

Also, I would try to focus on the most common industries in the following priority(sorted by probability of getting a case): 1-retail and CPG; 2-airlines; 3-Telecom; 4-banking; 5-natural resources; 6-tech

Best!