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Business Frameworks

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Case Interview Marathon Workshop
Victor Cheng’s Case Interview Core Frameworks v1.0

By Victor Cheng

www.caseinterview.com

These materials provided on an “as is” basis with no warranty or guarantee expressed or implied. You use them at your own risk. This information is provided to you for free for non-commercial use. You are welcome to forward this to your friends provided you do not alter any of the content and keep the entire document in tact. I retain copyright ownership over these materials

© Victor Cheng

www.caseinterview.com

PROFITABILITY FRAMEWORK

Revenue/ Unit Revenue # Units Sold

For the problem branch (e.g., Revenue/Unit or # Units Sold) 1) SEGMENT the number, break it up into its component parts, compare to historical metrics to find where the shift is coming from 2) ISOLATE the key driver causing bulk of problem 3) EXPLORE possible resolutions Possible Segments to get data for, isolate & explore: * By product / product line * By distribution channel * By region * By customer type (new/old, big/small) * By industry vertical Once you know mathematically what's causing the problem, you need to understand WHY the number has declined in the context of the marketplace. This may be a "compound framework" problem requiring you to use a general market analysis framework. If so, most often you will want to start with the customer (demand side) analysis and potentially may have to use the entire framework. For problem branch (e.g, fixed or variable cost) SEGMENT into its component parts * Segment cost by logical components * Segment costs by value chain Value Chain Example:

Profits

Fixed Cost Cost/ Unit Cost # Units Sold Variable Cost

Identify fixed costs in each of the following: Raw Materials -> Factory -> Distribution ->Customers Compare to historical. Find the problem component.

Keep "drilling down" by finding the problem

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