Frameworks Flashcards
Profitablity Framework
Profit = Revenue - Costs
Revenue = price * number of units sold Cost = fixed costs + variable costs
4 C’s and P
USED FOR: new business/product/market entry, and for industry analysis
Customers: what are the segments? who’s your target? what are their needs & wants?
Competition: how much market share do your competitors have? what is their growth potential? what is their strategy?
Company: capabilities (production, organizational structure, resources available)? where do you have? what is the brand? what is the culture? financial situation?
Costs: economies of scale?
Product: what are your products/services? how do they fit the needs of the customer? complementary goods? substitutes for your product?
4 P’s
USED FOR: marketing cases
Product: what do customers want? what are your features that meet those needs? differentiation from competitors?
Price: price sensitivity of customers? competitors’ price point? established industry price points?
Place: distribution channels (placement of products, how consumers access them)? how do competitors distribute?
Promotion: how to get awareness? how do competitors promote?
M and A McKinsey
USED FOR: mergers & acquisitions cases
1) Find stand-alone value of the targeting company.
•Financial Factors: profitibaility, growth, cash flow
•Non-financial Factors: capabilities, expertise, brand
2) Look at synergy of 2 companies: how are they better combined than just summing them up individually
3) Consider other factors: feasibility, legal issues, culture clash, etc
7 S Framework
USED FOR: company improvement, strategy implementation, aligning company during changes
The idea that any one of these S’s is copiable by competitors, but together they form a network that gives you a competitive advantage
HARDWARE
Structure: how is company divided? coordination?
Strategy: how to achieve objectives set? how do you deal with market change?
Systems: main systems that run organization? where are controls & how are they monitored and evaluated? internal rules to keep people on track?
SOFTWARE
Style: how’s management and leadership? competitive between employees or nah?
Staff: what are the positions?
gaps in competencies?
Skills: are current employees qualified? skill gaps? assessment of skills?
Shared Values: corporate culture? values company was based on?
Porter’s 5 Forces
USED FOR: new market entry, industry analysis, business strategy development
Threat of New Entrants: what are the barriers to entry, and are they low or high? what advantages does your company have to protect itself
Threat of Substitute Products or Services: can your products be easily replaceable? what is the perceived level of product differentiation?
Bargaining Power of Suppliers: how easy is it for suppliers to drive up prices? depends on number, size, inputs. can you substitute suppliers
Bargaining Power of Buyers: how easy is it for buyers to drive down prices? depends on how population, availability of substitutes, price sensitivity.
Competition: how intense is competition in your market? compare yourself to others
STP
USED FOR: market research cases
Segmenting: determine customer segments and each’s characteristics
Targeting: determine potential of each segment and decide which to focus on
Positioning: how do we position ourselves to best get that target customer?
SWOT
USED FOR: new product/business, new trends, strategic planning
Strengths
Weaknesses
Opportunities
Threats
(inside company vs outside in the market)
Value Chain
USED FOR: product/cost analysis, competitive advantage
purpose is to identify a competitive advantage that cannot simply be copied by figuring out where exactly a company adds value to a product that only they can do (eg: R and D? packaging and shipping? manufacturing?)
Inbound Logistics: processes related to receiving, storing, and distributing inputs internally
Operations: processes that change inputs into finished products
Outbound Logistics: activities that deliver finished product to customer
Marketing and Sales: processes to persuade clients to choose you over competitor
Service: activities related to maintaining value once it has been purchased (eg: maintenance)
Supply and Demand
USED FOR: market entry, price setting, market research
Supply: how much do you want to sell? how is supply changing? segmentation of suppliers?
Demand: how much are people willing to buy? how is demand changing? segmentation of buyers?
2x2 Matrix
When you have 2 factors that yield different outcomes when combined
Eg: bathroom faucet. hot & cold taps. turn on hot & hot = hot. hot & cold = warm. cold & cold = cold. off & off = off.
BCG Matrix
Market Growth (Y) vs Market Share (X)
Stars: high market share in a fast-growing industry
Cash Cows: high market share in a slow-growing industry
Question Marks: low market share operating in fast-growing industry
Dogs: low market share in a slow-growing industry
Product Life Cycle
USED FOR: product cases to figure out what stage the market for your product is in
Emerging: R&D for product. create a need for it. little competition
Growth: Marketing important, deal with rapid growth. New entrants in market
Maturity: Focus on manufacturing and cost. Prices fall and competition intensifies
Declining: high costs and low profits. competition exits. focus on being a low-cost niche player
*Sales Curve: slowly goes up until maturity, huge spike at end of growth, goes down in declining
**Profits: negative during emerging, goes up in growth and maturity then declines
5 C’s
USED FOR: financial cases and company analysis
Character: track record, consumer perception, progressiveness, legal problems
Capacity: how are manufacturing plants in terms of capacity? or any other industry
Capital: cost of capital relative to competitors? how healthy are its cash flows, income statement
Conditions: what is business climate like and potential for growth?
Competitive Advantage: what is the unique edge that can be defensible and not easily copied?
Core Competencies
each firm has a limited number of things it’s really good at – these are the core competencies
identify them broadly so you can grow business and make changes in the market
sell off parts of the business that do not align with core competencies
