In this master library, we will include some common frameworks and some underrated ones you might never hear of. Also, we will provide tips on how to customize and create your own unique frameworks.
What is Case Interview Frameworks?
Definition of case interview framework
A case interview framework is a standard template to help structure and break down common business problems.
The importance of frameworks
Frameworks can help you be more MECE and make sure you don’t forget key aspects that need to be addressed in order to resolve a particular type of business problem. But remember that looking at all key aspects of business problems is just a very first step into solving those problems.
You can also develop your business intuition through learning about frameworks since it illustrates how companies and firms operate. In this master library, we will show you various useful frameworks, which we really recommend you to customize it in each specific case. Each framework will include 3 parts (What?, Why?, How?).
Your ultimate frameworks library
No.1: Profitability framework
Technically, this framework is to mathematically break down profit until you have gathered enough information to conclude or to switch to a more qualitative framework.
We break profit down into Revenue and Cost. Then Revenue can be split up into Price and Unit Sales, while the Total Cost can be divided into Fixed Cost and Variable Cost.
No.2: Business Situation (3Cs & P)
3Cs & P stands for Company, Customer, Competition, and Product.
This framework can be applied to almost all and may need a high level of customization and flexibility.
In general, 3Cs & P is good for: a new business, new product, new market entry, growth strategy, or company assessment.
Questions could you ask when targeting new market entry, growth, assessment, or product:
1) What are your company’s capabilities & expertise?
2) What is the company’s brand & culture?
3) How is its financial situation?
1) How are your customers segmented?
2) What are your target customers?
3) What are the customers’ needs/wants?
1) What is the market share and growth potential of each competitor?
2) How have the competitors performed?
1) What is the nature of your products or services?
2) Do they meet the needs and wants of customers?
3) What are the complementary goods and substitutes?
No.3: McKinsey M&A framework
You can use this framework whenever you hear the word “Merge or Acquisition” to answer the question “Should A acquire or merge with B?”
There are 3 major aspects:
First, how is the targeted company doing? The term we often use at McKinsey to refer to this box is the “stand-alone value” of the targeted company.
Size – Growth?
Brand – Reputation?
Special Rights – Resources?
Expertise – Strengths?
Second, is it a good fit? The official term for this box is “synergy”.
Strength – Weakness?
Other industries and cases specific…?
The third box is for any other miscellaneous factors
Legal issues, etc.
No.4: Porter’s five forces
Porter’s Five Forces is a model that identifies and analyzes five competitive forces that shape every industry and helps determine an industry’s weaknesses and strengths.
Five Forces analysis is frequently used to identify an industry’s structure to determine corporate strategy. This framework helps to explain why various industries are able to sustain different levels of profitability.
- Competition in the industry: the number of competitors and their ability to undercut a company.
- Potential of new entrants into the industry: The less time and money it costs for a competitor to enter a company’s market and be an effective competitor, the more an established company’s position could be significantly weakened.
- Power of suppliers: how easily suppliers can drive up the cost of inputs. It is affected by the number of suppliers of key inputs of a good or service, how unique these inputs are, and how much it would cost a company to switch to another supplier.
- Power of customers: The ability that customers have to drive prices lower or their level of power is one of the five forces. It is affected by how many buyers or customers a company has, how significant each customer is, and how much it would cost a company to find new customers or markets for its output.
- The threat of substitute products: Substitute goods or services that can be used in place of a company’s products or services pose a threat.
No.5: The 4Ps
4Ps stand for Product, Price, Place, and Promotion.
The 4 Ps are used by businesses to identify key internal and external factors such as what consumers want from them, how their product or service meets or fails to meet those needs, how their product or service is perceived in the world, how they stand out from their competitors, and how they interact with their customers.
SWOT matrix is designed for use in the preliminary stages of decision-making processes and can be used as a tool for evaluation of the strategic position of a business.
Strengths and weaknesses are frequently internally-related, while opportunities and threats commonly focus on the external environment. The name is an acronym for the four parameters the technique examines:
Strengths: characteristics of the business or project that give it an advantage over others.
Weaknesses: characteristics of the business that place the business or project at a disadvantage relative to others.
Opportunities: elements in the environment that the business or project could exploit to its advantage.
Threats: elements in the environment that could cause trouble for the business or project.
No.7: Market entry framework
The market entry framework is commonly used to make decisions on whether a company should enter a new market or not.
Market size and profitability
Products already available in the market
The intensity of the competition
The heaviness of the regulation etc.
Differences between the client’s current market and the new one they are now targeting
Number of times client has entered new markets and success achieved
Other companies already in the new market, etc.
The current financial situation of the client
Cost to enter a new market
Ongoing costs once the market entered
Expected revenues and return on investment, etc.
Timing of market entry (now vs. delay)
Speed of market entry (test region vs. the whole country)
Opportunity to buy a competitor or do a JV
Management approach (control from HQ vs. decentralize), etc.
No.8: Pricing framework
The pricing framework helps you to come up with an appropriate price for a probably-newly-launched product.
There are 4 aspects to consider:
Fixed costs and their allocation across products?
Variable costs and the number of units produced/sold?
Profitability target, etc.?
The price of the next best alternative to our product?
Features that make our product better than the next best alternative?
Value of these features, etc.?
Available substitute products from the competition?
Price of these substitute products?
Value of our product vs. substitutes, etc.?
The objective of the pricing strategy (e.g. high profitability or high market share)
Opportunities for upsell/cross-sell that should be taken into account (e.g. Starbucks and water bottles)
Possibility to sell different versions of the same product (e.g. Macbook Air, Macbook Pro), etc.?
No.9: BCG Matrix
The BCG growth-share matrix is a portfolio management framework that helps companies decide how to prioritize their different businesses by their degree of profitability.
The matrix reveals two factors that companies should consider when deciding where to invest—company competitiveness, and market attractiveness—with relative market share and growth rate as the underlying drivers of these factors.
Each of the four quadrants represents a specific combination of relative market share and growth:
Low Growth, High Share: Companies should milk these “cash cows” for cash to reinvest.
High Growth, High Share: Companies should significantly invest in these “stars” as they have high future potential.
High Growth, Low Share: Companies should invest in or discard these “question marks,” depending on their chances of becoming stars.
Low Share, Low Growth: Companies should liquidate, divest, or reposition these “pets.”
No.10: Balanced Scorecard
The Balanced Scorecard, referred to as the BSC, is a framework to implement and manage strategy.
It links a vision to strategic objectives, measures, targets, and initiatives. It balances financial measures with performance measures and objectives related to all other parts of the organization.
In brief, the four scorecard perspectives are:
Here is an example of a balanced scorecard:
No.11: The GE-McKinsey Nine-Box Matrix
The nine-box matrix offers a systematic approach for the decentralized corporation to determine where best to invest its cash.
Rather than rely on each business unit’s projections of its future prospects, the company can judge a unit by two factors that will determine whether it’s going to do well in the future: the attractiveness of the relevant industry and the unit’s competitive strength within that industry.
No.12: Ansoff Matrix
The Ansoff Matrix also called the Product/Market Expansion Grid, is a tool used by firms to analyze and plan their strategies for growth.
The matrix shows four strategies that can be used to help a firm grow and also analyzes the risk associated with each strategy.
The four strategies of the Ansoff Matrix are:
Market Penetration: It focuses on increasing sales of existing products to an existing market.
Product Development: It focuses on introducing new products to an existing market.
Market Development: Its strategy focuses on entering a new market using existing products.
Diversification: It focuses on entering a new market with the introduction of new products.
Of the four strategies, market penetration is the least risky while diversification is the riskiest.
No.13: Scenario Planning
Scenario planning is making assumptions on what the future is going to be and how your business environment will change over time in light of that future.
More precisely, Scenario planning is identifying a specific set of uncertainties, different “realities” of what might happen in the future of your business.
Step 1: Focal Issue: identifying what a person or organization will focus on
Step 2: Key Factors: brainstorming a long list of factors that could affect the focal issue
Step 3: External Forces: considering the more remote forces operating in the larger world, e.g., geopolitical, economic, social, and technological forces that are often left out of the usual business plan
Step 4: Critical Uncertainties: calling for a convergent process of prioritization
Step 5: Scenario Logics: narrowing down from the virtually infinite number of possible futures to settle on just two to five that will lead to strategic insight
Step 6: Scenarios: actually telling the story of each chosen scenario
Step 7: Implications and Options: figuring out the implications of each scenario and the strategic options appropriate to those implications
Step 8: Early Indicators: Early indicators are the first signs of the big changes that differentiate one scenario from another
No.14: Value Chain Analysis
Value chain analysis is a framework for businesses to analyze the activities they perform to create a product. Once the activities are analyzed a business can use the results to evaluate ways to improve its competitive advantage, efficiency, and increase profit margins.
- Inbound Logistics
This is how materials and resources are gained from suppliers before the final product or service can be developed.
Operations are how the materials and resources are produced, resulting in a final product or service.
- Outbound Logistics
Once a product or service is finished, it needs to be distributed. Outbound logistics describes this delivery process.
- Marketing and Sales
This is how your product or service is presented and sold to your ideal target market.
This is the support a business provides for the customer which can include support and training for the product, warranties, and guarantees.
- Firm Infrastructure
This entails all the management, financial, and legal systems business has in place to make business decisions and effectively manage resources.
- Human Resource Management
Human resource management encompasses all the processes and systems involved in managing employees and hiring new staff. This is especially important for companies that provide in-person service, and excellent employees can be a competitive advantage.
- Technology Development
Technology development helps businesses innovate. And technology can be used in various steps of the value chain to gain an advantage over competitors by increasing efficiency or decreasing production costs.
This is how the resources and materials for a product are sourced and suppliers are found. The goal is to find quality supplies that fit the business’ budget.
No.15: VRIO Analysis
VRIO framework is the tool used to analyze a firm’s internal resources and capabilities to find out if they can be a source of sustained competitive advantage.
Step 1: Identify valuable, rare and costly to imitate resources
Step 2: Find out if your company is organized to exploit these resources
Step 3: Protect the resources
Step 4: Constantly review VRIO resources and capabilities
No.16: The McKinsey 7-S Framework
This framework is used to identify which elements you need to realign to improve performance or to maintain alignment and performance during other changes. These changes could include restructuring, new processes, an organizational merger, new systems, and change of leadership.
Strategy: This is your organization’s plan for building and maintaining a competitive advantage over its competitors
Structure: this how your company is organized (that is, how departments and teams are structured, including who reports to whom).
Systems: the daily activities and procedures that staff use to get the job done.
Shared values: these are the core values of the organization, as shown in its corporate culture and general work ethic. They were called “superordinate goals” when the model was first developed.
Style: the style of leadership adopted.
Staff: the employees and their general capabilities.
Skills: the actual skills and competencies of the organization’s employees.
Follow these steps:
Start with your shared values: are they consistent with your structure, strategy, and systems? If not, what needs to change?
Then look at the hard elements: How well does each one support the others? Identify where changes need to be made.
Next, look at the soft elements: Do they support the desired hard elements? Do they support one another? If not, what needs to change?
As you adjust and align the elements, you’ll need to use an iterative (and often time-consuming) process of making adjustments, and then re-analyzing how that impacts other elements and their alignment. The end result of better performance will be worth it.
No.17: Jobs to be done
The Jobs To Be Done framework involves measuring how effective your products and services can help your customers reach their goals and solve their problems.
Under-Served: customers who have unmet needs and are willing to pay more to get a job done better; you should offer a better-performing, more expensive product
Over-Served: customers who perceive existing products in an industry as cost-prohibitive and inaccessible; you should offer a simpler, more accessible, and less expensive product than current offerings
Served Right: customers whose needs are sufficiently satisfied by products and services in the industry; you should focus on related “jobs to be done”
Non-Consumers: people whose current solutions don’t involve the market at all, or who are not even attempting to get the job done as they cannot afford any of the existing solutions.; you should offer a simpler, more accessible, and less expensive product than current offerings
No.18: Buyer Utility Map
The Buyer Utility Map identifies a full range of utilities that a product or service can potentially adopt in a buyer’s experience cycle.
It helps you to offer value in areas typically not seen in your industry. The framework also helps to remove roadblocks that stand in the way of converting non-customers into customers.
No.19: Competitive Analysis Matrix
The Competitive Profile Matrix is an analytical tool that helps you establish your company’s competitive advantage in an easy to use and read format.
At one glance, you will be able to see your company’s competitive landscape, your position in a given market and possible opportunities to differentiate your company’s products and services from the competition.
No.20: Hambrick and Fredrickson’s Strategy Diamond
It acts as a checklist to ensure you have a good strategy. The model states that you’ll have a good strategy if you can answer these questions.
Arenas: Where will we be active?
Vehicles: How will we get there?
Differentiators: How will we win in the marketplace?
Sequencing: What will be our speed and sequence of moves?
Economic logic: How will we make our returns?
3. How to customize your own frameworks?
Customizing or creating your own frameworks is not easy. You can only do it by practicing with cases as much as possible. In real life, consultants rarely use pre-defined frameworks to solve their client’s issues. Rather, they create a unique framework based on the MECE principle specific to their problem
There are a few things you should keep in mind when coming up with a framework:
- Never forget to be as MECE or structural as possible.
- Utilize the issue tree to sketch your framework.
- Break down your problem in a top-down style.
- Practice t this step-by-step with not only business problems but with any real-life issues.