2. Crack the Case – PrepLounge 2
Agenda of Training
• Theory
Introduction - Cases & frameworks
7 commandments of a case interview: application
examples
Market Sizing framework: impress your interviewer
applying the 3 golden rules
The Profitability framework and an application example
The “Core Three” framework: Customers
(+ market), Company (+ product), Competitors
• Practice – PrepLounge.com
3. Crack the Case – PrepLounge 3
Cases & frameworks (simplified view)
Three main categories of cases:
1. Market Sizing
– Always use the Market Sizing framework
2. Business Situations
– 85% of the time: General Business Situation
framework
– 15% of the time: M&A / PE or Capacity frameworks
3. Other cases types
– No off-the-shelf frameworks
4. Crack the Case – PrepLounge 4
Cases & frameworks (detailed view)
Reduce costs
Pure Market
Sizing
Market Sizing
framework
Market entry New product
Operations strategy
Business turnaround
Increase
sales
Competitive
response
Business
Situation
framework
Industry analysis New business
Pricing &
Valuation
Private
equity
M&A
M&A / PE
framework Supply &
Demand
Capacity
change
Capacity framework
Finance
HR
Others
No specific
framework
Brainteasers
5. Crack the Case – PrepLounge 5
Reduce costs
Pure Market
Sizing
Market Sizing
framework
Market entry New product
Operations strategy
Business turnaround
Increase
sales
Competitive
response
Business
Situation
framework
Industry analysis New business
Pricing &
Valuation
Private
equity
M&A
M&A / PE
framework Supply &
Demand
Capacity
change
Capacity framework
No specific framework
• Assess the financial health of
Swatch
• How should Coca Cola define
the salaries of their overhead?
• What economical consequences
would a change in traffic
direction in Britain have?
Finance
HR
Others
No specific
framework
Brainteasers
• Why are gully covers round?
• …
6. Crack the Case – PrepLounge 6
Finance
HR
Others
No specific
framework
Brainteasers
Reduce costs
Pure Market
Sizing
Market Sizing
framework
Market entry New product
Operations strategy
Business turnaround
Increase
sales
Competitive
response
Business
Situation
framework
Industry analysis New business
Pricing &
Valuation
Private
equity
M&A
M&A / PE
framework
Capacity framework
• For what price could Intel sell the i5 processor if
they increased their units production by 25%?
• What is the best diamond extraction and
commercialization volume per year for De Beers?
Supply &
Demand
chart
Supply &
Demand
Capacity
change
Capacity framework
7. Crack the Case – PrepLounge 7
Supply &
Demand
Capacity
change
Capacity framework
Finance
HR
Others
No specific
framework
Brainteasers
Reduce costs
Pure Market
Sizing
Market Sizing
framework
Market entry New product
Operations strategy
Business turnaround
Increase
sales
Competitive
response
Business
Situation
framework
M&A / PE framework
• How much is facebook worth?
• Bain Capital wants to buy 10% of Dropbox for
US$300 million. Is that a good deal?
• Should UPS really merge with TNT?
• Should GM buy its windshield provider (vertical
integration)?
Use Business
Situation
framework
with focus on
synergies!
Industry analysis New business
Pricing &
Valuation
Private
equity
M&A
M&A / PE
framework
8. Crack the Case – PrepLounge 8
Pure Market
Sizing
Market Sizing
framework
Pricing &
Valuation
Private
equity
M&A
M&A / PE
framework Supply &
Demand
Capacity
change
Capacity framework
Finance
HR
Others
No specific
framework
Brainteasers
Business Situation framework
• C&A has been facing a steady decrease in sales…
Detailed
discussion
after break!
• Henkel wants to diversify its business and enter
the packaging industry. Is that a good idea?
Reduce costs Operations strategy
Business turnaround
Increase
sales
Competitive
response
Industry analysis New business
Market entry New product
Business
Situation
framework
9. Crack the Case – PrepLounge 9
Industry analysis New business
Pricing &
Valuation
Private
equity
M&A
M&A / PE
framework Supply &
Demand
Capacity
change
Capacity framework
Finance
HR
Others
No specific
framework
Brainteasers
Reduce costs Operations strategy
Business turnaround
Increase
sales
Competitive
response
Business
Situation
framework
Market Sizing framework
• How many golf balls fit in a Boing 747?
• How many shoes are sold in Brazil per year?
• What is the market of hearing aids in Europe?
• For how much would you sell the Golden Gate
bridge?
• How heavy is Manhattan?
Pure Market
Sizing
Market Sizing
framework
Market entry New product
Detailed
discussion
after break!
10. Crack the Case – PrepLounge 10
The commandments: Opening the case
1. Listen actively
– Fully concentrate!
– Note down ALL information
2. Pause, paraphrase problem and clarify all
questions
– “So, if I understood it well, I’m the CEO of a company…”
– Double check on objective: “Is reducing production
costs our only goal in this case?”
– Don’t be afraid to ask: make sure you understood
the problem 100%
11. Crack the Case – PrepLounge 11
The commandments: Opening the case
3. Plan the solution structure (roadmap)
– Ask for 1 minute to gather your thoughts
– Identify case type and corresponding framework
– Describe and draw framework for interviewer
– Organize your notes (consultants are supposed to be
always “client-ready”)
+ point: You don’t need to call your
structure a framework! Interviewers
always complain that candidates force-fit
their cases into off-the-shelf frameworks
Profit
Revenue Costs-
Example: Profitability framework
12. Crack the Case – PrepLounge 12
The commandments: Cracking the case
4. Be answer-first
– Always list a few possible hypotheses and set
out with one of them
– Start with corresponding branch of framework
– Refine/rebuild hypothesis as you find out more
Example: Coca-cola’s profit has been declining in the last 2 years.
Hypotheses:
Profit
Revenue Costs-
Revenues have decreased
Costs have increased
Both
+ point: Use your general culture to help
choose initial hypothesis
13. Crack the Case – PrepLounge 13
The commandments: Cracking the case
5. Keep structured throughout the case
– Always refer to structure
– Don’t jump around framework branches
– Consistently explore branches and exclude them if
they are not relevant
– Summarize findings when switching major branches
– Be MECE!
Example: Coca-cola
Profit
Revenue Costs-
Answer first: Costs have increased
Raw
material
DistributionLabor Others
+ point: Mention that
your structure is MECE
14. Crack the Case – PrepLounge 14
The commandments: Cracking the case
6. Gather data the right way
– ALWAYS segment your data!
– Proactively ask for relevant data
– Don’t be too vague
– Quantify whenever possible
– Go for the trend (this year vs. last years)
– Company-specific or industry-wide?
15. Crack the Case – PrepLounge 15
The commandments: Closing the case
7. Close the case properly
– Ask for a minute to gather your thoughts
(and draw them up)
– It’s all about actionable recommendations!
– Choose a side and stand by it!
– First conclusion/recommendation then justification
– People like 3: give the interviewer 3 reasons!
Conclusion +
recommendation
Reason
1
Reason
2
Reason
3
+ point: Always apply the pyramid
principle (by Barbara Minto)
16. Crack the Case – PrepLounge 16
Market Sizing framework – the 3 golden
rules
1. Always use a tree to structure your problem
2. Find the trade-off between pragmatism and
accuracy
3. Do sanity checks along the way
17. Crack the Case – PrepLounge 17
Always use a tree to structure your problem
• How structured you are, that’s what matters!
• First the structure (downward from top) then
the numbers (upward from bottom)
1
Example: How
many golf balls can
you fit in a Jumbo?
# golf balls
in Jumbo
Golf ball
volume
(m3)
Jumbo
volume
(m3)
/ x Filling
constant
Radius 2
(m2)
x π
Sectional area
(m2)
Length
(m)
x
+ point: always
explicitly write the
units of the
variables being
estimated
10 3
30
1500
Diameter3
(m3)
125.10-6
125.10-6
1.2
12M . 1.2 ≈ 14M
50
18. Crack the Case – PrepLounge 18
Find the trade-off between pragmatism and
accuracy
• Rounding numbers is an art that must be used
• But… ask the interviewer if he’s fine with it!
• Round some up and some down
2
+ point: if you are able to make the exact calculation, round
up the answer instead of the inputs. Ex:
Right: 4 * 3.8 = 15.2 ≈ 15
Wrong: 4 *3.8 ≈ 4 * 4 = 16
19. Crack the Case – PrepLounge 19
Find the trade-off between pragmatism and
accuracy
• Work with averages when the problem is
complicated enough, otherwise segment!
• MECE is essential in segmentation
• Don’t make implicit assumptions
2
Example: How many
shoes are sold in
Brazil per year?
# shoes/year
in Brazil
+ point: try to segment in
three categories. Anyone
can understand 3
categories, which is not
true for 4 or more
# shoes
class B /
year
# shoes
class A /
year
Class A
population
# shoes
/ person
/ year
+
# shoes
class C /
year
x
+
Class B
population
# shoes
/ person
/ year
x … x …
20. Crack the Case – PrepLounge 20
Do sanity checks along the way
• Problems are not easy: you might make mistakes
• Take a step back, be critical, use common sense
• Do sanity checks for major branches
3
Example: How many
people can stand together
on an airport runway?
# people on
runway
# people /
m2
Runway
area
(m2)
x
Width
(m)
Length
(m)
x
+ point: don’t worry if
your check is off by 2
times. But do
something if it’s off by
10 times or more
50 1,000
50,000 5
250,000
21. Crack the Case – PrepLounge 21
• Only profitability problem (quantitative focus)
• Only conceptual problem (qualitative focus)
• Combined problem (quantitative + qualitative)
Business Situation compound framework –
3 different combinations
Profitability
framework
“Core Three”
framework
Profitability
framework
“Core Three”
framework
22. Crack the Case – PrepLounge 22
• Profit: number 1 reason for consulting projects
• Almost half of Business Situation cases start with
a profitability problem
– Sales falling
– Costs rising
– Both
The Profitability framework and an
application example
profit
costsrevenue -
revenue /
unit
# units
sold
x variable
cost
fixed cost+
cost / unit
# units
soldx+ point: focus on isolating the problem
by applying the commandments
23. Crack the Case – PrepLounge 23
Actionable recommendations
Competitors
Company
(+product)
Customers
(+ market)
The “Core Three”: Customers (+ market),
Company (+ product), Competitors
• First and foremost the
customer: the
company’s raison
d’être
• The company and its
products
• Competitors and
competitive landscape
The “Core Three” framework
Insights
24. Crack the Case – PrepLounge 24
The “Core Three” – Customers (+market)
• Who are our customers?
– How can we segment them?
– How big are the segments? What is our
market share?
– Customer concentration (bargain power)?
• What does the customer expect (per segment)?
– Do we understand it?
– Do we fulfill it?
– Which distribution channels do they like?
• Is the market growing? Is it profitable?
Competitors
Company
(+product)
Customers
(+ market)
25. Crack the Case – PrepLounge 25
The “Core Three” – Company (+product)
• What is our product?
– Is it differentiated or a commodity?
What’s the pricing?
– Can we cross-sell add-ons to it (bundles)?
– Is there a substitute threat?
– If portfolio: what does the BCG matrix look like?
• What is the client’s company?
– What are the company’s core competences?
– Which distribution channels are used?
– What are the main cost blocks (use the value chain)? Is
there supplier concentration (bargain power)?
– What are the company’s main assets (brand value,
customer loyalty) and liabilities (legal problems, debts)?
Competitors
Company
(+product)
Customers
(+ market)
26. Crack the Case – PrepLounge 26
The “Core Three” – Competitors
• Who are our competitors?
– How is the competition structured
(fragmented, monopoly, oligopoly etc.)?
– How do they behave? Is there a price war?
– Best practices: are they doing something better than
us? Do we do something better than them?
• How does our cost structure compare with our
competitor’s?
• Are there barriers to entry?
• Is the market regulated? If so, how?
Competitors
Company
(+product)
Customers
(+ market)
27. Now it’s your turn!
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Notas del editor
Our discussion about the M&A framework is limited to this slide
How to value a company?
Stock market value (attention whole price is not current price times number of stocks!!)
Assets – liabilities (book value) -> hard to quantify soft assets like brand recognition
Multiples method (Revenues, Profit, Return on equity, more recently for internet companies: number of users)
DCF (future values are discounted and considered as their net present value)
Is a Merger a good strategic move?
- You have to understand the market of both companies, their clients, competencies, competitors (We’ll see all these points in the Business Situation framework) and look for synergies: this is the keyword!
Most of the cases you’ll solve fall into this category.
Why is there an intersection between the Business Situation framework and the Market Sizing framework:
- often times simplified market estimations are necessary e.g. to decide whether to enter or not a market, launch or not a new product etc.
Listening actively
Forget the world outside and fully concentrate (I now it is easier said than done!) What I did for instance before and between interviews was to repeat in my head the business framework main aspects. It helped a lot to concentrate!
Note down ALL information mentioned by the interviewer: he might not like to give it away twice
2) Pause, paraphrase and clarify
Before saying anything, make a pause and say: “Well... that is an interesting question!”
- Double checking the objective is always a smart thing to do: It might buy you a lot of time if the interviews reveals another objective from the beginning of the case. Ex. Turnaround case: extra objective estimate for how much the company should be sold in case it were to be sold.
Clarifying questions
- you are not supposed to know what a commodity preferential stock option is! You are no specialist and the interviewer knows it
- You cannot crack the wrong case!
Identify case type and corresponding framework:
That should not be too difficult. We will see how to do that in detail, but the main advantage of the approach I’ll show to you is that with only 2 frameworks we can cover around 80% of the cases you’ll have to solve. Marc Consentino’s Book Case in Point details 11 frameworks!!
Take 1 minute to gather thoughts:
There is no problem in asking for 1 minute. However, don‘t spend the whole 60 seconds just looking to the ceiling. Think for some seconds and then start drawing your structure
Describe framework and your roadmap as far as you can before you start:
Draw the main components of your framework and note down the main aspects that will be treated per component/branch. This always impresses interviewers.
Keep your notes organized:
Keep the first page for important data, which you can quickly access during interview (work in landscape mode)
Interviewers keep your notes after interview and look at your organization if they have any doubts about giving you an offer or not
Consultants try to be at all times client-ready:
1) they don‘t have the time to make it again better;
2) The client may indeed come along unexpectedly check on progress.
Be anwer first:
There might be 1000 possible reasons for the problem the client are facing. A way to not get overwhelmed by all those possibilities and to help give a direction/focus to the consultants analysis is to pick one Hypothesis before starting.
The hypothesis must be compatible/supported by the framework you chose.
As you gather data, refine or rebuild your hypothesis
+ point: Don’t choose the initial hypothesis randomly!! Chance to show you are informed about the world around you
Always refer to structure:
- That doesn’t mean that you cannot change your structure or make it evolve (suppose you segment costs geographically but the interviewer gives the hint that you should segment by category)
Consistently explore branches and exclude them if they are not relevant
Choose the order wisely based on the importance of each branch. Imagine Omega has cost problems: they have 3 BUs: Sport watches (80%) Luxury watches (15%) Feminine watches (5%)Costs have increased in all of them but for different reasons. How would you tackle the problem?
If you are lucky, the interviewer will say costs are not the problem! If not you will have to dive deeper to find that out – sometimes they lead you to the wrong path on purpose to see how you deal with it.
Be MECE: Mutually exclusive and Collectively exhaustive (show in flipchart)
Always, always segment your data: This is crucial. The only way you can solve complex problems in the consulting world is by breaking them down into smaller pieces. You are like a detective investigating a crime: you have to look into every piece of the puzzle to be able to solve it.
Without segmenting your data you can miss the whole point:
Ex 1 (product line): a bottled water company has had decreasing revenues and thus profits. The water market has become more and more competitive, prices have been steadily declining the last years and all competitors are suffering the same consequences as us. Here you might be inclined to conclude that the company should change to a more promising market, right? Wrong! Turns out that the Sparkling water division of the company is booming, and with 2x better margins than the normal water, it has increased revenues 40% in the last 3 years while normal water decreased 20%.
Ex 2 (regional): Mercedez has been facing a consistent decrease in sales in the last years. It did not seem to benefit from the last years’ economic upturn like for instance BMW. You may already be tempted to brainstorm new marketing campaigns, new car models, customer needs trends etc. However, if you have segmented the sales information into regional segments, you would realize that it has beat all other brands in Asia and Latin America.
Ex 3 (distribution channel): After Lidl, Aldi and other hard discounters came to the market, Rewe suffered a hard blow in sales of lower end products. Here you might precipitately want to conclude that REWE should abandon the lower end product lines and focus on more premium products only. What you don’t know is that cheap REWE products have been selling better than the other on the internet (this is because LIDL and ALDI have a lean cost structure that does not allow for delivery sales).
Proactively ask for relevant data:
The case interview is a simulation of the consulting reality. When you go to the client, you do not expect to receive from them the data that will give you a breakthrough and allow you to solve their problem. If they knew which data is needed to solve the problem they probably wouldn’t have spent millions hiring you. So you gotta find out which data we are looking for and proactively ask for it! That is when frameworks help us a lot. We’ll get to them in a sec.
Don’t be too vague: What’s been happening to the company that it is doing so bad??
Sometimes though the line the separates too vague from appropriate is thin. My tip is that if you are not sure whether it is too vague, then ask it: EX: Market estimation question about the number of glasses in Germany: “How is the age distribution of population in Germany?”
Explain why you need the information before asking for it
Example 1) Humm… Interesting! So in order to be able to isolate the specific component (or components) of our costs are causing the problem, I would like to break down the costs into its main segments.
Example 2) So you are saying that the # units we sold this years was the same as last year but still our revenues decreased 10%. That must mean that our prices have gone down by 10%. Now, in order to find out whether this is an internal problem or industry wide, I would like to know whether competitors have faced a similar fall in their prices.
Quantify whenever possible
Suppose your client says that the are having a cost problem. They have increased 20% this year compared to last year (then you ask if this is the only problem). You break down costs into its main components: Labor, raw material, distribution, marketing, overhead, facilities. If the interviewer says that Labor, raw material and facilities increased, you HAVE to ask exactly how big they are and how much they increased (just a percentage does not suffice!) so that you can tackle the most relevant cost blocks first.
Go for the trend (this year vs. last years)
Companies are living beings that change the whole time: Apple became in only a few years one of the most profitable companies in the world right after being in the brink of bankruptcy.
It is no use to have a picture of the company at a certain point in time and having no idea how it got there: it profit margin is now 20% it can be a great think knowing that it was 15% last year but a disaster if we know last year it was 40%. So always go for the trend when asking for data!!
Company-specific or industry-wide?
Choose a side and stand by it:
- Of course you feel confident about closing a factory and laying off 2000 people after gathering information for 20 minutes. However, you have to take a side! Don’t say “humm I’m not sure what to do…” Make clear what analyses would still need to be done before the decision is implemented.
Conclusion First: I took a long time to learn that at Bain: it is really important. Stefan’s story about switching mind frames at home and at work!
This also applies to Market Sizing problems.
People like 3!
Before changing slides:
2 Examples of closing in a non-consulting context:
Bad closing:
The farm keeper calls the owner of the farm:
K: Sir, I have something to tell you, you parrot Fred died.
O: Fred? My awarded parrot?? How come did he die?
K: He ate bad (foul) meet
O: Bad meet??
K: Yes, might have been from your horses.
O: My horses?
K: Yes, they died of fatigue after carrying barrels of water the whole night
O: Barrels of water? For what?
K: To try to put off the fire in the house.
O: Fire???
K: Yes, one of the candles fell and set the curtains on fire.
O: Why candles, we have electricity in the farm?
K: I know, this was one of the candles of you mum’s burrial.
O: What????
K: Yeah.. She came unannounced and I shot her thinking it was a burglar.
Good closing:K: Sir, you’d better find a lawyer and come down to the farm as fast as you can because:N1: Your mum died and you need to figure out the bureaucracy of the heritage before her sisters get all her money
N2: The whole house burnt to the ground. You have 2 days to give the insurance company a good explanation if you want to get any money back from them.
N3: You parrot and horses that would take part in competitions next week died, you need to find animals to replace them.
How structured you are, that’s what matters:
- How heavy is NY? The interviewer has also no freaking clue of how much it weighs. Your final answer doesn’t really matter much, but instead, how you got there.
- In other cases the interviewer may know what the answer approximately is (for instance the last annual revenue of the aeronautical industry in Europe): then you have to be careful and make a lot of sanity checks (we’ll get back to these checks in a sec)
First the structure (downward from top) then the numbers (upward from bottom):
This is a very exclusive tip I’m giving you. You won’t find it in many other places and it really impressed my interviewers: Don’t complicate the problem unnecessarily by mixing structure and numbers!
Another reason: if you start calculating before layout your whole structure, it might happen that you realize a mistake in it that obliges you to take another approach. If you start making calculations you will have wasted much more time until you realize the mistake
Once you laid out the whole structure, you can totally forget it and focus 100% on the individual calculations you have to make from the leaves up to the top: you basically simplified a lot the problem by splitting it in two: structure and calculation!
BEFORE Showing filling constant ask what is missing: first prize offer!
Rounding numbers is an art that must be used
You cannot be fast enough with exact calculations unless you are a genius or the data very simple
Be careful if the rounding is more than 10%!!
But… ask the interviewer if he’s fine with it!
Ask if the interviewer wants an exact calculation, he might want to assess your accuracy
Round some up and some down
This is an advanced tip: try to remember if you have rounded up or down and by how much (1%, 5% or 10%). You can compensate roundups fairly well! 9*11 example
+ point: impress the interviewer with your calculation speed (4,0 *3,8 = 15,2)
Work with averages when the problem is complicated enough, otherwise segment!
- Suppose you have spent already 30 min estimating “What are the early expenditures of all German firms with business trips” and you just have two things left to conclude the case: how much they spend with taxis and with food. You won’t segment these in detail, because you don’t have the time.
MECE is essential in segmentation
If you are not MECE, then you are wrong. You are counting people twice or not counting them at all! Example of Expensive and cheap shoe shops.
Don’t make any assumptions without discussing them first:
Don’t rely on previous knowledge without mentioning it
Don’t make tacit assumptions: shoes sold in Brazil are only sold to Brazilians??
+ point: Three is in everyday’s life!: (children, adult, elderly), (First, business, economy), (social classes A, B and C), (Expensive, market price, cheap) etc… but off-course, if a company has 4 divisions there’s nothing you can do about it!
It’s not easy, you might make mistakes
Sanity checks are there to detect them. Story of yearly revenue against monthly revenue at BAIN
Sanity checks are based on common sense
Compare to well known values
How many full stadiums does 250,000 people mean?
Proportional comparison with other known numbers: GDP of Portugal knowing its population
- Consultants need to have both very good quantitative AND qualitative skills.
For engineering backgrounds it is common that interviewers focus a bit more on the qualitative skills whether
For B.A. backgrounds (you guys) they might want to test a bit more the quantitative skills.
Framework:
- Notice that calculating variable costs as cost/unit times unit helps you to have a quick idea of how the margin for the product is and also of how many products you need to sell to break even
The idea is to isolate the problem by applying the commandments:
Proactively ask for data without being too vague
Quantify whenever possible
How can we segment them?
- Remember: if you don’t segment you miss the whole point!
How big are the segments?
- Here you should understand the focus of the client: do they aim at the biggest chunk of the market or go for a niche segment? Ex: rolex.
What is our market share? Customer concentration = buying bargain power?
Farmers in France hate Carrefour because they stipulate what they want to pay.
Customer’s expectations
If we don’t understand them we can’t fulfill them
Is it differentiated or a commodity?
Do we sell steel or iphones?
Can we cross sell add-ons to it (bundles)?
The begin of the Virgin empire: selling records through a magazine (Richard Branson’s autobiography)
Is there a substitute threat?
The Kodak death
If portfolio: what does the BCG matrix look like?
Do we have cash cows that support the investment in our stars of question marks? Do we have products in the end of their life-cycle?
How is the client’s company?
What are the company’s core competences?
What can we be the best in the world at (+ what makes you money? + what lights your fire? - Good to great – Jim Collins)? Second means nothing.
Which distribution channels are used?
Do we resell through independent retailers? Subscription mailing? Direct selling? Do we have our own shops?
What are the main cost blocks (optional use of the value chain)?
How do we spend our revenue? Are we like Nike -> marketing or like a Bank -> overhead?
What is the current situation: assets (brand value, customer loyalty) and liabilities (legal problems, debts)?
Customer loyalty is a big deal (Apple fans). Solar panel company: end of subsidies.
How are the structure of the competition
Monopoly: Microsoft
Oligopoly: Accountancy market controlled by the big four E&Y, PWC, KPMG and Deloitte
How do they behave? Is there a price war?
- Example between Gas stations
Best practices: are they doing something better than us?
- Story about project at Bain: carpenters and painters really liked to receive a souvenir from competitor for new year’s or special dates
How does our cost structure compare with our competitor’s?
- Do they have economies of scale that we don’t? Can we compete with them simply by lowering the price?
Are there barriers to entry?
Do the competitors have patents? BAD
Does the firm we want to by have patents? GOOD
Is the market regulated? If so, how?
- You can only do business in China if you have a local partner.
- Pharmaceutical market / agro-toxins (herbicides) is extremely well regulated.