Tom SpencerA mental model is simply a representation of reality. The world is complex, and so we cannot account for every moving part and keep all the details in our brains. In the words of the famous physicist Richard Feynman: “You only think you know, as a matter of fact. And most of your actions are […]
The product-market expansion matrix may prove useful in the consulting case interview and is relevant when considering growth strategies. It might be used on a standalone basis or as part of a larger profitability framework. There are four ways that a company can pursue growth: Market penetration: A strategy to increase sales to existing customers […]
The outsourcing matrix may prove useful in the consulting case interview, either as a standalone framework or as part of a larger profitability framework. With the view to reducing costs, there are three questions that a firm would do well to consider: How long will it take to reduce major cost drivers? Are the activities strategically […]
While you may not directly use the 7 S Model in the consulting case interview, it will give you a deeper understanding of how to examine the inner workings of an organisation, identify strengths and sources of competitive advantage, as well as weaknesses and reasons why an organisation may not be operating effectively. The 7 […]
While it may not be a core framework for solving consulting case questions, the BCG Growth Share Matrix can help to broaden your understanding of how a company might want to allocate cash between products and business units. The framework is based on the idea that the amount of cash a product uses is proportional […]
Value Chain Analysis is another tool that may prove useful during the consulting case interview. It can be used to analyse the cost structure of a company as part of a declining profitability case, or to analyse the supply chain as part of an operations case. To understand which activities provide a company with a competitive […]
The Porter’s Five Forces framework is used to determine the competitive intensity and attractiveness of an industry, and is relevant in the context of entering a new market, M&A, or starting a new business. The intensity of competition will depend on the strength of the five competitive forces, however the significance of the forces will vary by […]
The profitability framework is probably the most important framework for solving consulting case questions Profit equals revenue minus cost. 1. Revenue Revenue is normally thought of as being a function of price per unit and units sold. Declining revenue can derive from a fall in prices or a reduction in units sold, and can be […]
Before taking decisive action, it may be a good idea to assess the lay of the land According to Sun Tzu, the quality of decision “is like the well-timed swoop of a falcon which enables it to strike and destroy its victim.” And much like a circling falcon overhead, a company needs to take a […]
The profitability framework can help executives, consultants and entrepreneurs to diagnose and respond to falling prices, declining sales volume, or rising costs BUSINESSES sometimes experience reduced profitability. This is not necessarily a problem if the decline was expected because a business is sustained from cashflow, not profit, and long term growth can be pursued through capital appreciation, which shows […]
Understanding the big picture can help reveal hidden opportunities and threats 1. Background In 1967, Harvard Professor Francis Aguilar wrote a book entitled “Scanning the Business Environment” in which he identified four important factors – Economic, Technical, Political, and Social – that a business can use to better understand the big picture. While the ordering […]
MECE stands for “mutually exclusive” and “collectively exhaustive” 1. Background MECE stands for “mutually exclusive and collectively exhaustive” and is one of the hallmarks of problem solving at McKinsey (The McKinsey Way by Ethan M. Rasiel). 2. Benefit of the MECE framework You can use the MECE framework to help you think clearly about a business problem. […]
Whether your goals are personal or professional, setting SMART goals is the first step to actually achieving them “A goal properly set is halfway reached.” ~ Zig Ziglar 1. Background ALTHOUGH its origins are unclear, SMART goal setting appears to have been first used by Peter Drucker in his 1954 book “The Practice of Management”. […]
The GE-McKinsey 9-Box Matrix offers any decentralised corporation with multiple business units a systematic approach to help it decide where to invest its cash IN SEPTEMBER 2008, the McKinsey Quarterly published an interactive audio presentation on the GE-McKinsey 9-Box Matrix. An outline of this framework is provided below. 1. Background The 9-Box Matrix follows in […]
The Product Life Cycle Model can be used to analyse the maturity stage of products and industries 1. Background THE idea of the Product Life Cycle was first developed in 1965 by Theodore Levitt in an article entitled “Exploit the Product Life Cycle” published in the Harvard Business Review on 1 November 1965. 2. Benefit […]
When a company is trying to borrow money, executives, entrepreneurs and consultants should be aware that there are five criteria that most lenders care about What are lenders looking for? IT IS important to understand what lenders look for when they lend money because companies often need to borrow money for various reasons: increase cash […]
To understand which activities provide a business with a competitive advantage, it is helpful to separate operations into a series of value-generating activities referred to as the “value chain” 1. Background VALUE Chain Analysis is a concept that was first described and popularised by Michael Porter in his 1985 book, Competitive Advantage. 2. Relevance of […]
A useful framework for evaluating the marketing strategy for a product THE Four P’s consists of: price ; product ; position/place; and promotion . 1. Price The pricing strategy employed by a firm for a particular good or service will have a significant effect on profit. There […]
The 7 S Framework can help executives and consultants to understand the inner workings of an organisation, and it provides a guide for organisational change 1. Background DEVELOPED around 1978, the 7 S framework first appeared in a book called The Art of Japanese Management by Richard Pascale and Anthony Athos, and also featured in […]
The NPV of an investment is the present value of the series of cash flows generated by the investment minus the cost of the initial investment 1. Net Present Value (NPV) explained THE net present value (NPV) of an investment is the present value of the series of cash flows generated by the investment minus the […]
The Porter’s Five Forces framework is used to determine the competitive intensity and attractiveness of an industry HARVARD Business School professor Michael Porter, in his 1979 book Competitive Strategy, developed the Porter’s Five Forces. The Porter’s Five Forces framework is used to determine the competitive intensity and attractiveness of an industry. Attractiveness in this context […]
SWOT Analysis is a strategic planning tool used to evaluate the strengths, weaknesses, opportunities, and threats involved a business venture 1. SWOT Analysis Explained ALBERT Humphrey is credited with inventing the SWOT analysis technique. SWOT analysis is a strategic planning tool used to evaluate the strengths (S), weaknesses (W), opportunities (O), and threats (T) involved a business […]
The cost benefit analysis is a basic analysis framework that involves weighing up the costs and benefits of one course of action against another IN YOUR consulting case interview you will most likely be required to make a recommendation on a hypothetical business problem. Understanding how to […]