Business Problem Archetypes

What are Case Archetypes?

The 12 Archetypes

Strategy Scenarios:

1. 
   Entering a new market
   
2. 
   Industry analysis
   
3. 
   Mergers and Acquisitions
   
4. 
   Developing a new product
   
5. 
   Pricing Strategies
   
6. 
   Growth Strategies
   
7. 
   Starting a new business
   
8. 
   Competitive Response
   

• Operations Scenarios:

9. 
   Increasing sales
   
10. 
    Reducing Costs
    
11. 
    Improving the bottom line
    
12. 
    Turnarounds
    

• 
  
  
• 
  
  
• 
  
  

• Framework Review

• 
  A rigorous understanding of these frameworks will give you the raw material to fill your issue trees during case analysis.
  

• Porter’s Five Forces

• 
  This framework is extremely flexible and can be used for cases involving almost any industry. It is best applied to cases that involve corporate strategy and new opportunity questions. By analyzing each of the five forces and their related areas, you should be able to come up with insight as to what course of action should be taken for the company in question. Be careful though--don’t spend too much time dwelling on any one force, because you could easily use up a whole hour. Keep your goal in mind and drive towards a solution to the question at hand.
  
• 
  
  
• 
  A major limitation of the Five Forces Model is that it does not take several important market forces into account: Government (Regulation/Tax), Technological Change, and Alliances (Partners). Whenever appropriate try to include these issues in your analysis.
  
• 
  
  
• 
  The nature and degrees of competition in an industry hinge on five forces:
  

1. 
   The threat of new entrants
   
2. 
   The bargaining power of buyers (customers)
   
3. 
   The bargaining power of suppliers
   
4. 
   The threat of substitute products or services
   
5. 
   Changes in relative standing or positioning among current competitors
   

• 
  
  
• 
  
  • 
    
    
  The strength of these threats determines the profitability of the market:
  

1. 
   Intense competition allows minimal profit margins
   
2. 
   Mild competition allows wider profit margins
   

• 
  The goal of the strategist is to determine whether a firm should enter/exit the industry, find a position in the industry where the company can best defend itself, or influence the factors in its favor. It is not a strong enough goal to simply find an ideal market position.
  
• 
  
  
• 
  A. There are several sources of barriers to entry:
  

1. 
   Economies of Scale
   
2. 
   Product Differentiation - Established firms have brand identification and customer loyalties
   
3. 
   Capital Requirements
   
4. 
   Switching Costs - One-time costs facing the buyer when switching from one supplier’s product to another’s
   
5. 
   Access to Distribution Channels
   
6. 
   Cost Disadvantages Independent of Scale
   
   1. 
      Proprietary product technology
      
   2. 
      Favorable access to raw materials
      
   3. 
      Favorable location
      
   4. 
      Government subsidies
      
   5. 
      Learning and/or experience curve
      
7. 
   Government Policy
   
8. 
   The newcomer’s expectations about likely retaliation of the incumbents or the slow growth of the industry
   

• 
  B. A buyer group is powerful if:
  

1. 
   It is concentrated or purchases large volumes relative to seller sales
   
2. 
   The product it purchases from the firm represents a significant fraction of the buyer’s costs or purchases
   
3. 
   The products it purchases from the industry are standard or undifferentiated
   
4. 
   It faces few switching costs
   
5. 
   Buyers pose a credible threat of backward integration
   
6. 
   The industry’s product is unimportant to the quality of the buyer’s products or services
   
7. 
   The buyer has full information
   

• 
  C. A supplier group is powerful if:
  

1. 
   It is dominated by a few companies and is more concentrated than the industry it sells to
   
2. 
   It is not obliged to contend with other substitute products for sales to the industry
   
3. 
   The industry is not an important customer of the supplier group
   
4. 
   The supplier group’s product is an important input to the buyer’s business
   
5. 
   The supplier group’s products are differentiated or it has built up switching costs
   
6. 
   The supplier group poses a credible threat of forward integration
   

• 
  D. Substitute products that deserve the most attention are those that:
  

1. 
   Are subject to trends improving their price-performance tradeoff with the industry’s products
   
2. 
   Are produced by industries earning high profits.
   

• 
  E. Rivalry among existing competitors increases in the presence of:
  

1. 
   Numerous or Equally Balanced Competitors
   
2. 
   Slow Industry Growth
   
3. 
   High Fixed or Storage Costs
   
4. 
   Lack of Differentiation or Switching Costs
   
5. 
   Capacity Augmentation in Large Increments
   
6. 
   Diverse Competitors
   
7. 
   High Strategic Stakes
   
8. 
   High Exit Barriers:
   

1. 
   Specialized assets
   
2. 
   Fixed costs of exit
   
3. 
   Strategic interrelationships
   
4. 
   Emotional barriers
   
5. 
   Governmental and social restrictions
   

• The 4 Ps

• 
  The four Ps, sometimes referred to as the marketing mix, is one of the most popular and versatile marketing frameworks.
  

• 
  Product
  
• 
  Price
  
• 
  Promotion (marketing communication)
  
• 
  Place (value delivery)
  

• Product

• 
  In examining the competitiveness of a company's product, whether it is a new product being introduced or an existing product, it is necessary to examine the product itself. The following are some of the questions that you might find helpful in assessing the competitiveness and "fit" of a product:
  
• 
  Does the product have the right positioning in the marketplace?
  

• 
  Does it serve a particular segment of the market?
  
• 
  Is it a mass market or niche product?
  
• 
  Is it differentiated enough to stand out against the competition?
  

• 
  What kind of brand equity does the product uphold?
  

• 
  What are some of the issues/risks associated with the "image" or "perception" of the brand relative to other brands in the market?
  
• 
  What are some of the features that can be added to the product that would add to the value or the perception of value to the consumer?
  

• 
  What are some of the packaging issues that might present an opportunity or impediment to increased sales?
  

• 
  Does my packaging reflect the positioning of the product? If mass market, does it have a mass market appeal?
  
• 
  How does the product fit in the overall strategy of the company?
  
• 
  How does the product relate to other products produced by the company?
  
• 
  What kind of a financial role is the product playing (i.e., cash cow, long-term profit potential, etc.)?
  

• Price

• 
  Getting the right price for a product is extremely important for the success of the company. Unfortunately, sometimes the right price is not easy to determine. Depending on the price elasticity of the product, a 1% increase in price has anywhere from a -20% reduction to a 25% increase in net income.
  
• 
  The most important factor of what ultimately drives price is the customer's perceived "value" of the product. For example, if a company produces shirts with a unit cost of $10, but the market perceives the product as fashionable or has the right brand name, the shirt can then be priced to capture any consumer surplus at $50 or even $80 per shirt. The same manufacturer introduces another shirt at the same cost the following season. This time, however, the shirt is no longer considered in vogue and thus has little "value." This time, the shirt would be priced at $25.
  
• 
  Other factors that determine the price of a product are:
  

• 
  The Cost to Produce COGS: maintain low costs to capture bigger profit margin
  
• 
  The price paid previously - the expected price: if consumers are used to paying a certain price for a product, it is very difficult to convince them of paying a $20 premium for the same product. However, if their perceived value of the product is higher than what they paid in the past, then there's room to capture some consumer surplus
  
• 
  The price of substitutes: the price of a product is driven down if the product can be easily substituted by another that serves the same function
  

• Promotion (marketing communication)

• 
  Promoting and developing a specific brand for the product captures the most value not only by the supplier in being able to increase sales volume and per unit margin, but also by the consumer in developing a certain perception of the product. Again, promotion and branding must be aligned with the other "Cs" and "Ps" that have been covered thus far. The message that is communicated to the consumer, and in turn what the consumer believes about the product, will drive the success of the product. Promotion and branding can consist of a number of elements such as traditional advertising (mass or niche), or no advertising to maintain certain perception of exclusivity, word of mouth, direct mail, etc.
  
• 
  What message are we trying to communicate? What is the objective?
  

• 
  Is the goal to achieve a household name? Build loyalty? Defend the product's positioning?
  
• 
  Does the message portray the total customer experience?
  
• 
  What are some of the barriers to communicating the desired message?
  
• 
  Does the promotion/branding focus on the long-term view of relationship building with the consumer?
  

• 
  Does it encourage repeat purchasing? Focus on customer retention?
  
• 
  How is the marketing strategy different from that of the competition?
  
• 
  How will the competition react?
  
• 
  Which vehicles will you use to influence the decision making process?
  
• 
  Pull strategy: (direct at end user) use of advertising, direct mail, telemarketing, word of mouth, consumer promotions
  
• 
  Push strategy: use of trade promotions, sales
  

• Place (value delivery)

• 
  After having assessed the product positioning and gained an understanding of who your customers are, you need to develop strategy around which distribution channel you need to use and where to sell your product. The distribution channel can be through a third party or through an in-house sales force, and is responsible for transmitting the company's product to the customer (wholesaler, retailer, end user).
  
• 
  
  
• 
  The distribution channel that is selected and the outlets at which the product is sold MUST be aligned with the positioning of the product and focused customer segment.
  
• 
  
  
• 
  There are many issues to consider when examining the place/channel distribution. Below are just some thoughts that you may want to consider when formulating strategy on delivering the product to market:
  

• 
  Which channels are most closely aligned with the company's strategy?
  
  • 
    Does the company need to build new channels or eliminate existing ones?
    
• 
  What functions does the company want the channels to serve?
  
• 
  Does it make more sense to go direct to the end-user or deliver the product through intermediaries?
  
• 
  What are the economics of the channel?
  
  • 
    Who needs to capture what margin?
    
  • 
    Does this fit in with the intended selling price of the product?
    
• 
  How much control is the company willing to give up on the delivery of the product?
  
  • 
    Is the company willing to work in conjunction with the distribution channel, by monitoring its timeliness and service, or by placing most of the weight on the channels in meeting customer needs?
    
  • 
    What would be the relationship of the company's sales force in this arrangement?
    
• 
  How would the company address any potential shifts in power to the channel?
  

• The 3 Cs

• Company

• 
  What resources does your firm have?
  
• 
  What are your firm’s strengths and weaknesses?
  
• 
  What is your firm’s value proposition to the customer?
  

• Customers

• 
  What is your market?
  
• 
  What are the customer needs?
  
• 
  How will we satisfy those needs?
  
• 
  How much are customers willing to pay?
  

• Competitors

• 
  Who are your competitors and what are they doing?
  
• 
  What are their strengths and weaknesses?
  
• 
  How are they meeting the customer’s demands?
  
• 
  What is their cost structure?
  

• The Other C’s

• 
  Cost
  
  • 
    What are the major costs?
    
  • 
    How have costs changed?
    
  • 
    How can costs be reduced?
    
• 
  Capacity
  
• 
  Culture
  
• 
  Competence
  

• The Profit Equation

• 
  
  
• 
  Profit = [Quantity x (Price - Variable Costs)] – Fixed Costs
  
• 
  
  
• 
  There are three drivers of profitability: sales volume (quantity), price and costs. When doing a case that involves a change in profitability, you must determine which of these elements have changed, and then determine the causes of those changes. Issues related to each of the three that must be examined are:
  
• 
  
  

• 
  Price
  
  • 
    What is the marginal contribution (Unit Price – Variable Cost)?
    
  • 
    Consumer demand elasticity
    
  • 
    Competitors’ price changes
    
  • 
    Market power – can we charge a premium? Have we lost a previous ability to charge a premium?
    
  • 
    Product differentiation
    
• 
  Sales volume (quantity)
  
  • 
    Loss of market share due to competitors’ actions
    
  • 
    Growth/reduction in overall market
    
  • 
    Increase/decrease in sales to current customers with current products
    
  • 
    Increase/decrease in sales to current customers with new products
    
  • 
    Increase/decrease in sales to new customers with current products
    
  • 
    Increase/decrease in sales to new customers with new products
    
• 
  Cost
  
  • 
    Portions which are fixed and variable
    
  • 
    Time frames in which costs are avoidable
    
  • 
    Allocation of costs to product, overheads etc.
    

• Value Chain Analysis

• 
  Value chain analysis is an excellent tool for analyzing value-added processes. The idea is to analyze the entire chain of events through which a product travels to get to the customer. A twist on this is to analyze how a new system—automation, for example—will affect a product’s value chain. This tool is best applied in operations-type questions and can be changed to fit the particular situation. In other words, don’t get stuck on the six categories listed here--for your case, maintenance or R&D, for example, might be pertinent categories. One of the most important qualities to display in interviews is the ability to adapt the tools you have to the situation at hand.
  

• 
  Inbound Logistics: Receiving and processing of incoming raw materials and supplies.
  
• 
  Operations: Describes the core function of the company. This could be anything from data input to manufacturing, depending on the nature of the company.
  
• 
  Outbound Logistics: Delivery to customer. This can include categories like packaging, storage, and installation, depending again on the nature of the company.
  
• 
  Marketing and Sales: If you need this explained to you, don’t bother interviewing.
  
• 
  Service: This includes items from maintenance contracts to customer handholding.
  
• 
  Support: This includes finance and accounting, human resources, etc.
  

• 
  
  
• 
  
  

• Financial Footprint

• 
  Financial footprints may include income statements, various financial ratios derived from income statements, and balance sheets. Using financial footprints enable you to identify problems that have appeared over years, across products, and or through business life cycles.
  
• 
  If you are given financial statements consider:
  

• 
  Is something changing?
  
• 
  Is the company surpassing or falling short of expected results?
  
• 
  Is the strategy working?
  

• 
  
  
• 
  
  Directory: 2012
  2012 -> The Case Against the nypd’s Quota-Driven ‘Broken Windows’ Policing What Is It?
  2012 -> Annual InStructional unit plan
  2012 -> University of Hawai‘i Maui College dental assisting program review october 21, 2013
  2012 -> Committee on the rights of the child the rights of all children in the context of international migration
  2012 -> Background on the Haitian Earthquake
  2012 -> The Collected Wisdom of Science Olympiad Coaches
  2012 -> Federal Communications Commission fcc 12-81 Before the Federal Communications Commission
  2012 -> Aa and na members Dying from Tobacco
  2012 -> [Baby Crying] 01: 04 [Ching
  
  
  
  Download 0.9 Mb.
  
  Share with your friends: