Case Frameworks for casing help MBB guid

Case Frameworks for casing help MBB guid

• 1.
  TYPE -1 INCREASE Revenue Analysis? Havewe lowered the price vs market standard?  What is our price distribution?  Has our price distribution shifted across products?  Can we increase prices, such as price elasticity and customer WTP?  Competitive Pricing Positions?  Can we bundle pricing/products together? Have we sold fewer stuff?  Have we lost customers?  Are we selling less stuff/customers?  Foot traffic in stores REVENUES External-Market Considerations Have customer tastes/preferences changed?  What are our customer segments?  What is their value proposition (e.g., price point, features)?  Partner with shops/customers for discounts – start loyalty programs Are other companies stealing shares?  Who are the major competitors?  What are their value propositions/positions?  Have some other competitors gained a share – our split?  Are competitors coming up with their strategy to combat the issue? Is market growth slowing?  What is the growth rate, and how has it changed?  Are any major industry trends affecting demand?  Can we target a new market segment?  Expand into new geographies & markets or even industries (Eg. Needle not only in healthcare but to fill jelly etc.) Has anything changed in our value proposition? Product Changes & Innovation:  Has our branding changed recently?  Has our product lineup been updated?  See Product mix and focus on something we do differently? o Improve Quality o Customization o Develop complementary products o Focus onto R&D o Automation tools
• 3.
  TYPE – 2REDUCE COSTS Have variable costs increased? Material:  Have ingredient/raw material costs increased directly (suppliers increased) or indirectly (we are making more stuff or throwing away stuff made in error/change in the process where more raw material is required per unit)?  Have packaging costs increased or we are packing more stuff or wasting packaging in error? Labor:  Have manufacturing labour costs increased —the number of workers (because we are producing more/ faulty equipment/change in process) or the hourly rate?  Have distribution labour costs increased — either the number of workers (because we are distributing more) or the hourly rate? Have fixed costs increased? Real Estate:  Has our cost for manufacturing plants increased (we have increased our plants or rent increase)?  Has our cost of distribution centres (we have increased the number of plants or rent increase) increased? Equipment:  Do we have new equipment we have purchased (e.g., baking ovens, trucks)?  Has equipment maintenance costs gone up? Marketing:  Have our advertising costs increased?  Do we have other marketing costs (e.g., slotting fees)?
• 4.
  TYPE 2: INCREASE Cost Analysis– Ours vs Competitors/Self Fixed costs and changes?  Manufacturing plants, equipment, new investment needed for new customers - equipment, R&D, etc  IT systems & inventory management tech stuff like ERP’s  Labour costs o Specialised people o In-store staff (hourly wage)  Rent  Administrative cost  Opportunity cost Variable costs and Changes?  COGS o Raw goods & materials o Procurement/Distribution Costs o Supply Chain Costs o Production waste Our Operational Inefficiencies/Operating Costs  Store/factory Layout  Inventory Management  Service Offerings  Employee Productivity  Capacity Management by allocating to other profitable segments?  Outsourcing stuff PROFITABILITY Revenue Analysis? Have we lowered the price vs market standard?  What is our price distribution?  Has our price distribution shifted across products?  Can we increase prices, such as price elasticity and customer WTP?  Competitive Pricing Positions?  Can we bundle pricing/products together? Have we sold fewer stuff?  Have we lost customers?  Are we selling less stuff/customers?  Foot traffic in stores Has anything changed in our value proposition? Our Product Changes & Innovation:  Has our branding changed recently?  Has our product lineup been updated?  See Product mix and focus on something we do differently? o Improve Quality o Customization o Develop complementary products o Focus onto R&D o Automation tools External-Market Considerations Have customer tastes/preferences changed?  What are our customer segments?
• 5.
   What istheir value proposition (e.g., price point, features)?  Partner with shops/customers for discounts – start loyalty programs Are other companies stealing shares?  Who are the major competitors?  What are their value propositions/positions?  Have some other competitors gained a share – our split?  Are competitors coming up with their strategy to combat the issue? Is market growth slowing?  What is the growth rate, and how has it changed?  Are any major industry trends affecting demand?  Can we target a new market segment?  Expand into new geographies & markets or even industries (Eg. Needle not only in healthcare but to fill jelly etc.) TYPE – 3 MARKET ENTRY 1. Will we be profitable? (Internal) Revenue:  Price: What is the price we can charge based on the market & competitors?  Quantity: How many can we sell each year?  Can we bundle existing and new products? Costs: Fixed costs and changes?  Manufacturing plants, equipment, new investment needed for new customers - equipment, R&D, etc  IT systems & inventory management tech stuff like ERP’s  Labour costs o Specialised people o In-store staff (hourly wage)  Rent  Administrative cost  Opportunity cost Variable costs and Changes?  COGS o Raw goods & materials o Procurement/Distribution Costs o Supply Chain Costs o Production waste 2. Are the market dynamics in our favour? (External) Market Characteristics:  What is the size of the market?  What is the growth rate like?  Are there any major trends?  Cannibalisation of existing product?  Geographies Competitors:  How many competitors are there?  Are any new competitors thinking of entering?  What are their value propositions?  Is the market fragmented enough for us to enter? Customers:  Are there any customer segments?  Have customer needs changed in the last year?  Any unmet needs?  What do they like/not like?
• 6.
  3. Do wehave a way to enter the market? (Entry Method) Organic:  What are the start-up costs of us going alone?  What skill sets do we have or lack to be successful? Inorganic:  Are there M&A opportunities to enter the market?  Are there JV opportunities?  Can we license it to some company? 4. Internal Fit & Capabilities
• 7.
  TYPE – 4ENTER MARKET 1. Direct Entry Alone P&L:  What is the expected revenue (P × Q)?  What are the costs—variable, fixed, and start-up? Capabilities:  Are there unique capabilities we need to operate in Wakanda?  How and how much would it cost to build them? 2. Joint Venture Unique Value-Add:  What is the P&L based on the value added by the partner?  Do JV partners have unique capabilities that are cost-prohibitive for us to build? Deal Structure:  Can we negotiate a win-win deal structure? 3.M&A Synergies:  What revenue, cost, or capability synergies can we buy?  What is the P&L based on these synergies? Valuation:  What is the price being offered?  What is the EBITDA and multiple that is justified?  What is our opportunity cost?
• 8.
  TYPE – 5M&A 1.Company Attractiveness Unpack motivations  Why are we interested (e.g., enter new geo, acquire tech, etc.)  Does it have a capable and experienced team?  Does it have other intangible assets such as a powerful brand or a valuable patent? Profitability of Company:  What is the revenue and cost structure?  How have revenue and costs changed in the past few years? How are they expected to evolve?  How does their P&L compare with ours (i.e., accretive or not)? Market Attractiveness:  Does it give us access to growing parts of the market?  Does it give us access to new customer segments? 2. Possible synergies? Revenue Synergies:  Are there opportunities to bundle or cross-sell to customers?  Are there distribution synergies to increase the presence of either product with customers? Cost Synergies:  Can variable costs be reduced (e.g., raw material procurement, adopting superior manufacturing processes)?  Can fixed costs be reduced (i.e., combining plants or offices)? Capability Synergies:  Does either company have unique capabilities that can be applied to the other’s product portfolio?  Are there concerns about cultural fit? 3. Is the price of the company attractive? Valuation:  What is the price being offered?
• 9.
   What isthe EBITDA and multiple that is justified?  What is the alternative use of money for our company (or IRR hurdle rate)? TYPE 6: PRICING 1. Customer Demand: Are customers willing to pay higher prices? Differentiation:  Do we have any unique products?  Can we offer unique services?  Is our location more convenient and worth the higher /lower price? Sustainability:  Can differentiation/ new price be sustained over time? 2. Profitability: How will prices impact our P&L? Revenue:  Will we sell more or less products by price change?  Corresponding increase/decrease in Q? Variable Costs:  Will material costs be lowered based on quantity change?  Will labour costs be lowered (e.g., fewer workers needed in-store)?  Would others be impacted in the value chain? Fixed Costs:  Can lower real estate, marketing, or other fixed costs make up the margin from lowering prices if needed?
• 10.
  3. Competitive Response LoweringPrices Further:  Does our competitor’s P&L enable them to lower prices even further, causing a pricing war? Differentiation:  Do our competitors have unique capabilities that will enable them to differentiate themselves?