In this post we will briefly look at some notes on popular Consulting Frameworks to help you build some thought process while solving consulting cases. Broadly the cases can be categorized into-

• Profitability
• Market Entry
• Pricing
• Growth

Profitability – Consulting Frameworks

• Scoping Questions
  • Cover 5Cs: Company, Customer, Context, Collaborators, Customer
  • Any recent change?
  • How much change in profit? from when was this observed?
  • Industry Trends? Macroeconomic Factors?
• Profit = Revenue – Cost
• Revenue (qty*price)
  • Selling Price per unit
  • No. of units
    • Supply (Value-Chain like primary op costs below)
    • Demand
      • No. of Customer
        • Pre-Service (4Ps = Product, Place, Price, Promotion)
        • During Service (Customer Journey/ Macro Level effects)
        • Post Service
      • Average Order Amount
      • Order Frequency
• Costs
  • Operational Costs
    • Primary (Value Chain)
      • Raw material (procurement/price/quality)
      • Inbound logistics (3rd party/self/owned vehicles/petrol price/storage costs)
      • Production Process
        • Material (oil/lubricants/spare parts)
        • Man power
        • Machine (upgrades/ maintenance etc.)
        • Method (production procedure changes)
        • Measurement (qty manufactured, dimensions of product etc.)
      • Warehousing/Storage/ Transportation (regional/central)
        • Spoilage Costs (rain/temp/rodents/ breakage due to man/ stealing/ shelf life/ FIFO-LIFO model)
      • Distribution/Marketing-Sales (Model/retailer-costs/sales- people + process + technology/ After sales support)
    • Secondary
      • R&D
      • HR and Admin
      • Infrastructure and Technology
  • Non-operational Costs
    • Depreciation
    • Amortization
    • Bad Debts
    • Finance Costs

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Pricing – Consulting Frameworks

• Scoping Questions
  • Objective
  • Target Audience – behavior, paying capacity etc.
  • Product Features
• Value-based Pricing
  • as per the value given to the consumer and recommend a band of pricing
• Competitor Benchmarking
  • as per industry or competition – supply-demand, product differences, market competition type
• Cost-based Pricing
  • Price= Cost price + Margin Potential/Targeted
  • Cost = Product (Fixed + Variable) + Sales/Marketing/Distribution + Other
  • Margin will also depend on the product differentiation in the market
  • Markup = [Profit] / [Cost]
  • Margin = [Profit] / [Revenue]
  • Gross Margin = [Sales – COGS] / [Annual Sales]
  • Profit Margin = [Net Income] / [Annual Sales]

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Market Entry – Consulting Framework

Recommend weather to enter the market or not? and any recommended channel/method of entry

• Scoping Questions
  • Objective? (profit/market share/diversification of portfolio)
  • Why this specific region?
  • Quantum of growth(profit/market share) in a targeted timeline?
  • Business Model / Product /
  • Existing Capabilities and Expected Capabilities in Value Chain
  • Past Experience
  • Who is the target Customer?
• Market Attractiveness/Opportunity
  • Market Size (guesstimate)
  • Growth Trends in the Industry
  • Competition
  • Consumer (needs/loyalty/behavior)
  • Barriers to Entry in the market
• Feasibility
  • Company Resources (Human/financial/etc.)
  • PESTEL (Political Environmental Social Technological Economical Legal)
• Viability (profitability)
  • Guess the estimated expected market share by making assumptions supported by rationale
  • Expected Profitability = (Market Size x Market Share x (Price – Variable Costs)) – Fixed Costs
  • Financial Projection can be calculated using market size due to industry growth over years and market share increasing
• Methods of Entry
  • Organic (self entry in market, high Capital Expense and high commitment required)
  • Joint Venture (Strategic Partnership)
  • Merger/Acquisition (very big decision as a lot of commitment and finance is required and brand can be at risk too)

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Growth – Consulting Framework

Recommendations will matter!

• Scoping Questions?
  • Objective – Top Line/ Bottom Line? Quantum of change?
  • 5Cs
  • Value Chain specific questions
• Price
• Order Frequency
• Number of Customers

	Market New	Market Old
Product New	Anything	New Customer Segment Premium/low-quality
Product Old	New customer segment New geography	Cross sell Up-sell Bundling