Learning different business frameworks can be daunting when you are preparing for management consulting interviews: 3C’s, 4P’s, SWOT, 2×2, Five forces, STP. Which framework should you learn and when should you use them? Here is our ultimate guide to the business case frameworks for consulting case interviews.
In addition to the great guide below, be sure to check out our 22 Best FREE resources for management and strategy consulting jobs.
Why use a business framework in the case interviews?
Business frameworks typically outline relationships between different business drivers and they help explain how a company’s business model works. Typically, the questions they help answer are pretty basic:
- How does this company make money?
- Will this company be successful in the market?
- What projects/products should the management team spend time and resources on?
- How do you value a company?
Business frameworks help with organizing your thoughts in a case interview. Typically you have fairly limited amount of time ~20 minutes or so in a case interview and you are supposed to gather the information, layout an approach, analyze the facts and make a recommendation. Knowledge and use of a suitable business framework helps you speed things up, in particular in your info gathering and approach. You always want to end the case interview with a recommendation and discussion of alternatives to your recommendation, therefore being efficient with your time is critical.
How to use (and not to use) a business framework
Once you have an initial understanding of the case, it is OK to step back and organize your thoughts, then you can lay out an framework to the interviewer on how you want to go about solving the case. During this time, think through the different business frameworks and figure out which one would be suitable for this case. Also, be flexible in your approach, if a case does not fit perfectly well into a framework, feel free to modify them on the fly.
One word of caution: If you fit every case into a business framework and apply these frameworks mechanically, it will backfire.
The interview wants to have a business conversation with you and they are trying to test your business maturity, thinking skills and creativity in a case. Therefore, avoid sounding robotic saying “I will apply Porter’s Five Forces to solve this case” or drawing out a standard case framework chart.
Instead, describe the business drivers about that framework, why you think that those drivers are appropriate to solve this business problem and how you want to take the conversation forward. This will set you up nicely for the rest of the case conversation.
… and when to use them
3 C’s Framework
3 C’s is a simple framework, the three C’s stand for Company, Customer, Competition. It was developed by business and corporate strategist Kenichi Ohmae. He refers to the three C’s as the strategic triangle. The framework requires these three C’s to be understood well for a company’s success. The first C is the Customer, which must be understood and segmented in depth. The second C is the Competitors: How they play, respond and adapt to the market. The third C is the Company: The inner workings, structure and competencies of a company. It is a pretty general and broadly applicable business framework to most cases.
4 P’s Framework
The 4P’s framework is most appropriate for product marketing, new product launch and in general, revenue improvement type of cases. The P’s stand for: 1) Product 2) Price 3) Promotion and 4) Place. The product is about the characteristics of the product being sold. Price is related to the pricing strategy, this can include the pricing, discounts, pricing structure (e.g. across regions, channels). Promotion is about how the product is marketed, e.g. through PR, word of mouth, marketing. And finally the place refers to the channels the product is sold, e.g. Brick and mortar stores, own vs. reseller stores, online
Porter’s Five Forces
Michael Porter is the management guru of a whole generation and also a former Harvard Business School professor. His five forces is a framework to analyze an industry. The five forces are Power of Suppliers, Power of Buyers, Substitutes, Rivalry (among firms), and Barriers to Entry. This framework is particularly useful for market entry, industry consolidation/proliferation scenarios and M&A type of cases.
Cost vs. Benefit
Cost and benefit is a pretty simple framework and broadly applicable. It can be used in the context of any business decision. To make a decision, you would outline the costs of the decision (direct costs such as cost of goods sold, sales and marketing,capital investments) and you can compare it against the benefits such as increased revenue, increased efficiency, etc. If you want to make it more financially rigorous, you would want to make it a discounted cash flow analysis and calculate present value or rates of return.
McKinsey 7-S Framework
This one is from the preeminent consulting firm McKinsey. 7S Framework very broad to analyze the success of a company. Since it covers many aspects of the company and its business, it may be too much to try to cover all aspects in a case interview. If you want to use this framework, you can focus on 3 to 4 of the S’s for the purposes of the interview and say that the other S’s are there but you will not dig into them due to time. Here are the 7 S’s
- Strategy – What is the company trying to achieve?
- Structure – How is the company organized?
- Staffing – What are the types and numbers of staff?
- Style – What is the management style
- Skills – What are the talent needs of the company?
- Systems – What are the supporting processes and technology of the company?
- Shared Values – What are the common beliefs and ways of doing business in the company?
Fixed vs. Variable Costs
This framework distinguishes between different type of costs that a company incurs. Fixed cost are typically costs that do not vary (within certain bounds) with the output of the company. For example, the factory overhead costs, management salaries, real estate costs
Profitability framework is pretty simple:
- Profit defined as Revenue minus Costs.
- Revenue can be expressed as Quantity * Price
- Costs can be expressed as Fixed Cost + Variable Costs * Quantity
You can use this framework for product line profitability, profitability improvement, cost reduction and volume growth type of case studies. It works both for physical products as well as services.
STP framework is useful to talk about what markets to targets for a product. S refers to Segmentation, which is how you think about different customer groups in the market defined by a set of common traits that you would want to serve differently. T refers to Targeting, the decision of which segments to serve. P refers to positioning, which is about how the marketing and messaging is tailored for the target segment. This kind of framework is most useful when talking about new product launches, product line extensions or reviving a product line.
This is a commonly used framework that includes Strengths, Weaknesses, Opportunities, and Threats. It is good to know this framework, in case it gets referenced, but one deficiency is that it does not let you make decisions and recommendations which is what you are asked to do in a consulting case interview, so use it with caution.
Value Chain/Supply Chain Analysis
A framework for understanding the different players that add value to a product. You can think of it as raw materials, production (can be multiple stages), distribution and stores. Depending of the industry, it can take many different forms with varying complexity. It is particularly useful to do forward, backward integration analysis, industry analysis (supplier/buyer power) as well as operations strategy cases.