Kindle Notes & Highlights
Victor Cheng’s book Case Interview Secrets and his YouTube workshop videos
Chapter 1: Prerequisites and optional resources
The reason we use the phrase “Preliminary Questions” instead of “Clarifying Questions” is because you should not only be clarifying the initial problem statement but actively seeking pieces of information which helps in understanding the client's company.
There are several ambiguities here. Sales could mean revenues or #units sold. You don’t know what are the different divisions of the company and if the mobile division’s sales can be treated and analyzed
independently. You’re not sure of why stagnation of profits is even a problem, because at the end of the day the company is still profitable. These can be good questions to ask: What are the different divisions of the company? Do I have to look at stagnation in the mobile division only?
How much were our sales growing by earlier, since when has there been stagnation? Why is stagnation of sales even a problem?(Did the company expect them to keep growing, why did it have this expectation) By sales do you mean revenue or #units sold?
Client’s ability to capture a market share target in the first year - Client’s ability to achieve a profit target in the first two years
“What metric should we use to decide if we should enter the market or not?”
“Is there any reason why the company is considering market Y in particular?”
3.1.2. Understanding Client's Company (Applies to all types of cases)
Product
Geography
Value Chain
Production --> Distribution --> Retailing
Together-product, geography and value chain-give you a good ‘look and feel’ of the company, makes it easy for you to visualize the company and puts you in a comfortable spot to analyze the rest of the case.
Sub-Strategies
Sub-strategy:
Mini-Synthesis:
Sub-strategy is for the individual parts of the case, what overall strategy is for the entire case.
How to segment? Segmentation can be done in different MECE (Mutually Exclusive & Comprehensively Exhaustive) ways -Geography -Value chain -Product parameter: Color, Price, Size -Distribution channels Mathematical break-down
Profit Margin= (% Revenue from Company stores) x (Profit Margin of Company Stores) + (%Revenue from Third-party stores) x (Profit Margin from Third-party stores)....
WHAT HAS CHANGED in the distribution channel.
If there are four possible causes to a problem, then by “drilling” through each branch we try getting to the bottom of each possible cause to either, - Identify it as a cause for the problem or - Eliminate it as a reason.
The 80/20 rule here signifies analyzing the branch responsible for 80% of the problem first and then analyzing the branch responsible for 20% of the problem.
In short, analyze the more important things first. You need to know the weights of sub-parts to a problem and choose which sub part to analyze first.
Let’s say cost comprises of manufacturing, distribution and marketing related costs.
If our distribution cost is twice as much as industry but production and marketing costs are almost the same, then distribution cost should be analyzed further even if on an absolute scale our production & marketing costs are greater than distribution costs.
For example, from the customer point of view, after sales service is important when selling laptops, but less important when selling guitars. For retailers, shelf life is an important concern for food items but less important for stationary.
There could be several parameters which could be compared with competition for this: Customer Characteristics -Customer segments (age group, gender, income, geography, type of requirement) targeted Product Characteristics
-Laptop price -Specifications-battery life, hard disk, RAM, graphics, monitor size, etc. -After sales services, complimentary products -Brand image Sales and Marketing -No. of Retail outlets, location of outlets, visibility in stores, sales representatives -Discounts & offers -Online marketing This is a big list and it’s not a good idea to indiscriminately go over them one by one. Instead, using business judgment, you can pick and prioritize few key issues, before moving to others.
So here, after we know it is Volume decline that is causing the problem, we should isolate the problem along the Value Chain: Production Issue->Distribution Push Issue->Customer Pull Issue.
1. Customers 2. Competition 3. Product 4. Company
