JUN.

05, 2016

Case interview
frameworks: a
comprehensive guide

Let's start with the basics: what are case interview

frameworks?

Case interview frameworks are a method for

approaching business problems using a defined
structure. The structure of a framework allows the user
to break down a problem into its fundamental pieces.
There are 2 categories of frameworks: pre-existing
frameworks, and custom bespoke frameworks.

In this guide, we'll cover both categories. Let's begin with

pre-existing frameworks, which are established business
frameworks. Some of them are pretty well known, so you
may have heard of them before. Here are the top 7 pre-
existing case interview frameworks:

Profitability framework

4Ps framework

Porter's 5 forces

3Cs framework

Market entry framework

Pricing framework

Merger and acquisition framework

The number one mistakes candidates make in case

interviews is to learn frameworks by heart and to reuse
them in interviews. Your interviewer will immediately
notice if you do this and penalise you. Instead, you
should create custom frameworks for all your cases.
Trust us, it's actually not that hard! You can jump to the
relevant sections below:

Why you should NOT reuse existing frameworks

Learn to create bespoke frameworks

Get your Case

Frameworks PDF

Includes 7 frameworks you need to

know for your cases. Get ready to
impress your interviewer :)

Your email address

I also want to sign up to the Free case

interview email course. Highlights include:
maths shortcuts, 2 live case videos, and
insights from ex-interviewers. We'll also
send you the occasional special offer.

Get by email

Unsubscribe at any time. IGotAnOffer's privacy

policy.

1. Profitability framework

The profitability framework is the most basic framework

in business analysis. It simply breaks down profits into its
basic revenue and cost components and is commonly
used to identify the root cause of profitability issues.

Revenue can simply be broken down in the

Number of units sold by the business times the
Price per unit.

Costs can be broken down in Variable and Fixed

costs. And Variable costs can then in turn be
broken down in the Number of units produced
and the Cost per unit.

2. The 4Ps framework

The 4Ps framework is widely used by company

executives to design their marketing strategy. There are
different variations of this framework that is also
sometimes referred to as the “Marketing mix” framework
but the 4Ps is the most common one. This framework is
commonly used when launching a new product or when
reviewing the positioning of an existing product.

Product: What are the key characteristics of the

product sold? Key elements of the product
definition could include: customer need fulfilled
by product, product usage (E.g.: who, where,
how, etc.), good vs. service, product lifecycle
(new vs. established), competing products and
substitutes, etc.

Price: At what price should the product be sold?

Different considerations need to be taken into
account here: the customer perceived value of
the product, the price of competitive products,
the customer price sensitivity, the cost of
producing the product, etc.

Promotion: Which promotion strategies should

be used to sell the product? Key elements to
consider include: promotion messages, media
type (E.g.: TV, social media, radio, etc.), best
time to promote, competitors’ strategies, etc.

Place: Through which channels should the

product be distributed? Key elements to
consider include: possible channels to distribute
the product (E.g.: in store, web, mail-to-order,
etc.), customer expectations in terms of
channel, requirement of a sales team or not,
competitors’ strategies, etc.

3. Porter's 5 forces

Porter’s 5 forces is a framework commonly used by CEOs

to explore the competitive dynamics of industries.
Indeed not all industries are structured the same way.
Some industries are really hard to get into (E.g.: banking)
while others have got very low barriers to entry (E.g.:
newspapers). Suppliers have got strong bargaining
power in some industries (E.g.: high-end medical
equipment) but little power in others (E.g.: small milk
producer), etc. Understanding these dynamics is
extremely important when considering to enter a new
industry or when assessing the competitive dynamics of
the industry a company is already in.

Customers’ bargaining power: How much

bargaining power do customers have? If there is
only one buyer but multiple suppliers then that
buyer will be at a strong advantage. Key
elements to consider here include: customer
concentration (percentage of industry revenues
from Top 3 buyers), customer price sensitivity,
customer information availability, etc.

Suppliers’ bargaining power: How much

bargaining power do suppliers have? Similarly
to the previous point, if there is only one
supplier but multiple buyers then that supplier
will be at a strong advantage. Key elements to
consider include: concentration of suppliers
(percentage of industry revenues to Top 3
suppliers), difficulty of switching from one
supplier to another, differentiation between
suppliers, etc.

Threat of substitutes: What are the

substitutes for the product and are they
increasingly popular? As a reminder, water is a
substitute for Coke while Pepsi is a competitive
product for Coke. Key elements to consider
here include: potential new substitutes, ease of
substitution, evolution of customer propensity
to substitute, etc.

Threat of new entrants: How difficult is it to

enter the industry for potential new players?
Key elements to consider here include:
regulation authorisations, capital requirements,
economies of scale, network effects, etc.

Existing rivals: How competitive are existing

rivals in the industry? Key elements to consider
include: number of competitors and their
market shares, similarity between their
products and products of the firm analysed,
financial health of competitors, etc.

4. 3Cs framework

The 3Cs framework is also commonly used to put

together strategies for companies. As you will notice
below, a lot of its components overlap with the Porter’s 5
forces.

Customers: Who is the customer? Key

elements to consider include: customer
demographics (E.g.: age, sex, income, etc.),
customer needs, customer segments size and
growth rates, customer willingness to pay and
price sensitivity, etc.

Competition: What are the competitive

dynamics? Key elements to consider include:
competitors’ value proposition and brand,
competitors’ market share and growth,
competitors’ financial health, etc.

Company: What defines the company? Key

elements to consider include: product offering,
profitability, core competencies, unique selling
point, financial performance and resources, etc.

5. Market entry framework

The market entry framework is commonly used to make

decisions on whether a company should enter a new
market or not. For instance, you could use it to decide if
Startbucks should enter the Chinese market. Or if Nike
should enter the sports broadcasting business.

Market: What are the characteristics of the

market we are trying to enter? Key elements to
consider include: market size and profitability,
products already available in the market,
intensity of the competition, heaviness of the
regulation etc.

Client capabilities: Does the client have the

right capabilities to enter that new market? Key
elements to consider include: 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.

Financials: Does it make financial sense to

enter the new market? Key elements to
consider include: current financial situation of
the client, cost to enter new market, ongoing
costs once market entered, expected revenues
and return on investment, etc.

Entry strategy: How should the client go about

entering the new market? Key elements to
consider include: timing of market entry (now
vs. delay), speed of market entry (test region vs.
whole country), opportunity to buy competitor
or do a JV, management approach (control from
HQ vs. decentralise), etc.

6. Pricing case framework

Companies always face a difficult issue when launching a

new product or service. What should its price be? The
pricing framework is extremely helpful to help answer
that question.

Cost-based: What price do we need to set to

cover all our costs? Key elements to consider
include: fixed costs and their allocation across
products, variable costs and number of units
produced / sold, profitability targeted, etc.

Value-based: How much are customers willing

to pay for our product? Key elements to
consider include: 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.

Competitor-based: What is the competition

charging for similar products? Key elements to
consider include: available substitute products
from the competition, price of these substitute
products, value of our product vs. substitutes,
etc.

Overall strategy: Given the elements above,

what should our pricing strategy be? Key
elements to consider include: 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.
Kindle and ebooks), possibility to sell different
versions of the same product (e.g. iPhone 8,
iPhone 8 Plus) etc.

7. Merger and acquisition framework

Finally, the merger and acquisition framework is used

when companies are looking to acquire or merge with
competitors. These situations are not very frequent in a
CEO's life but highly stressful which helps understand
why consultants are often asked to support such
initiatives.

The market: What are the characteristics of the

market in which the target evolves? Key
elements to consider include: market size and
growth, market profitability and intensity of the
competition, market regulation, etc.

The target: How attractive is the target to be

acquired? Key elements to consider include:
current and future financial position of the
target, important assets or capabilities owned
by the target, quality of the target's
management team, target / buyer culture fit,
etc.

The buyer: What's driving the buyer to make

the acquisition? Key elements to consider
include: acquisition rationale (e.g. target
undervalued, etc.), acquisition financing, buyer's
acquisition experience, acquisition timing, etc.

Synergies and risks: What are the acquisition

synergies and risks? Key elements to consider
include: value of individual and combined
entities, cost synergies, revenue synergies,
biggest risks of failure, etc.

Do not reuse pre-existing

frameworks for case interviews

Once you are familiar with frameworks, the question

then becomes: how do you now use that knowledge in
case interviews? There are a lot of opinions about how
you should do this on the Internet. But the main two
schools of thought seem to be: Marc Cosentino’s Case In
Point and Victor Cheng’s LOMS.

In Case In Point, Marc Cosentino attempts to classify case

interviews into 10+ categories and then suggests that
candidates should learn a specific framework by heart
for each of them. This is an interesting exercise as it
exposes you to a range of business problems and helps
you think about them in different ways. However, in our
experience, learning 10+ frameworks is difficult and time
consuming.

More importantly, in live case interviews, trying to

recognise one of the 10+ case categories and the
framework they are associated to is a real nightmare!
Instead of focusing on solving the problem at hand, you
end up trying to remember a framework that will not
even perfectly fit the case you are solving. In our
experience, the best candidates avoid this strategy.

In his LOMS programme, Victor Cheng advocates for a

much simpler method than Case In Point and suggests
you should only learn two frameworks: the profit
framework for profitability cases, and a general
framework for all other cases (Product, Consumer,
Company, Competition). The benefit of this approach is
its simplicity. It gives you a starting point that’s easy to
remember when you are putting a framework together.

However, in our experience, this approach has got a fatal

drawback. In practice, there aren’t that many profitability
cases, and as a consequence you always end up using
the general framework. Even if you adapt this general
framework to the case you are given, it will not be
perfectly tailored to the case you are trying to solve.
More importantly perhaps, your interviewer will quickly
realise that you are using a pre-cooked framework and
that will reflect very negatively on you.

Both Case In Point and LOMS share the same flaw: they
try to force pre-defined frameworks onto cases. In our
experience, this is bound to produce average results
because all cases are unique.

So here is the hard truth about case interview

frameworks: the best candidates DO NOT learn
frameworks by heart, instead they learn a consistent
METHOD to craft bespoke frameworks for each case.

Learn to create your own unique

frameworks

A good framework is a bit like a tailor made suit: it is

adapted to the problem you are trying to solve, the
company, the industry and it is also as MECE as possible.
If you use pre-defined frameworks, you run the risk of
missing important elements of the specific problem you
are trying to solve. This will therefore mean you perform
less well than you could have if you had created a
framework adapted to the specific problem from scratch.

In real life, consultants extremely rarely use pre-defined

frameworks. They are familiar with them because they
have studied them but they do not directly re-use them
as-is on projects. Instead, they create a framework or
issue tree specific to the problem they are working on. To
do so they rely on conversations with their client as well
as past experiences.

This might sound intimidating but the good news is that

creating bespoke frameworks is actually much simpler
than you think. It requires a few things:

Changing your approach from adapting

frameworks to creating them from scratch

Learning a step-by-step method to create

bespoke frameworks

Practicing this step-by-step method on multiple

examples

In our McKinsey Case Interview Prep Programme and

BCG & Bain Case Interview Prep Programme, we teach a
simple step-by-step method to create bespoke
frameworks for each case. Candidates who have worked
with us so far have managed to quickly learn this method
and to perform at a high level in their interviews. If you
would like to get a taste of this approach, you can watch
the video extracts below or download our Free Case Prep
materials here.

In summary, we find that learning existing frameworks is

useful to discover a range of ways to think about a
company. But in our experience, when it comes to
consulting case prep, it is best to forget these pre-
defined frameworks and focus instead on learning a
step-by-step method to craft bespoke frameworks for
each case.

If you’ve got any thoughts on frameworks or on this

article, leave them in the comment section, we look
forward to reading you.

Additional resources

If you would like to fast track your case interview

preparation and maximise your chances of getting an
offer at McKinsey, BCG or Bain, come and train with us.
More than 80% of the candidates training with our
programmes end up getting an offer at their target
firm. We know this because we give half of their
money back to people who don't.

McKinsey Case Interview BCG & Bain Case Interview

Training Programme Training Programme

The IGotAnOffer team

Photo: Roberto Taddeo / IM

Comments Community !
1 Login

% Recommend 7 Sort by Best

Start the discussion…

LOG IN WITH

OR SIGN UP WITH DISQUS ?

Name

Be the first to comment.

ALSO ON IGOTANOFFER

Case interviews - How to prepare – IGotAnOffer

12 comments • 2 years ago
IGotAnOffer — Hi MiguelI wouldn't really recommend
disclosing this during your interview process.
Consulting firms want to hire future partners. Hiring
you is a big investment for them and they'll want you
BCG tocase
stayinterview:
for as long as the only post
possible.If youyou needyou
tell them to
read want
(2018)to – IGotAnOffer
start a tech business they'll probably ask you
2 comments • a start
why not year ago
one now? Or why not go work for a
tech business
IGotAnOffer —andHi More
get experience
Spinach!Thanks
there?for These
yourare
good questions
comment. BCG to think
uses about.approach
a similar But probably
for ones
you want to avoid
experienced hires. during your
The only interviewmight be the
exception
process!Hope
BCG Potential that
Test helps!
which isn't always used for more
CaseMax
interviews: what financeasconcepts
senior folks.If you're applying do I hire
an experienced
needweto would
know? June 19you
encourage 2016
to double check with your
2 comments • 3 years
HR contact ago have to take the BCG Potential
if you'll
Test or not.I hope
IGotAnOffer — Hi Wendi,
that helps,
wellany
spotted!
furtherWe thoughts
have or
questionsthe
updated don't hesitate
article. Manytothanks
let me know.Max

The 8 most prestigious consulting firms in the

world
8 comments • a year ago
KEPLER Consulting — Seems to be validated info ,I
would like to let you and others know about the life of
consultants at KEPLER consulting.
https://www.kepler-consulti...
✉ Subscribe d Add Disqus $ Privacy Policy

GET IN TOUCH CONSULTING

Contact us + FAQs Case Interview

Facebook McKinsey PST

YouTube BCG Potential Test

About + Careers Consulting resume

Privacy Consulting cover letter

All articles

PRODUCT MANAGEMENT

Google PM interview

Facebook PM interview

PM resume

PM cover letter

All articles

Copyright © 2019, IGotAnOffer.