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•Identify the size of the product portfolio mix -- could the company be spreading its resources too thin
across a large product portfolio?
•Evaluate pricing strategy -- premium vs. value products (see PRICING card)
•Examine company’s core competencies, ability to leverage economies of scope and scale, potential issues
of capacity constraints.
•Draw visuals if possible -- charts (e.g., waterfalls, bubbles) 2x2 matrices, pies, etc.
REMEMBER:
•Try and make the interview an interactive dialogue between you and the interviewer. The interviewer is
not an adversary; you are working together to solve the client’s problem.
•C = personal consumption
•I = corporate investment
•G = government purchases
•Market equilibrium: Price -- Quantity point where demand equals supply (does not change unless
demand or supply shifts).
•Tariffs
•Anti-trust
•Assess regulation as a barrier to entry (through procurement, as well as environmental and safety
standards
•Trade barriers
•Leverage regulatory asymmetries (in your own market, other countries, etc.)
•Is the project a strategic necessity? If so, don’t evaluate IT investment based on current project
evaluation methods (i.e., 5 year payback, ROI criteria, etc.)
•Understand that IT infrastructure determines what a company will be able to do and not do in the future
•Must have close link between strategic planning and IT infrastructure planning
•Consider impact of current IT issues (e.g., the Year 2000 problem) on the company’s costs and
profitability
•Avoid over-investing
•Make sure that employees are prepared to learn and adopt new system
•PROFIT BEFORE TAXES = Gross Revenue - Returns & Allowances - COGS - SG&A - Depreciation -
Interest Expense
•Firm resources
•Industry trends
•Examine the cost structure of competitors (especially as it relates to the client’s cost structure) -- cost
differences may be based on the degree of vertical integration (see COSTS card)
•Consider likely competitive responses to the client’s actions and potential cooperative strategic
options
COMPETITOR INTENSIFICATION
•Consider various responses in an intensified competitive environment:
•Leverage customer information to identify and steal most profitable customers away from
competitors (“cream-skimming”); likewise, protect your most profitable customers
•Avoid price wars and other irrational behavior; remember that accommodating your competition
sometimes makes the most sense
•cultural fit
•Ignore fixed and other sunk costs, only consider variable costs
•lowers cost
•increased difficulty associated with integrating different technologies and knowledge bases (may
diffuse the concept of core competencies which results in loss of a company’s ability to
innovate and develop)
•costs of monitoring the contractor and contract specifications may outweigh lower unit costs
OPERATIONS EFFICIENCY
•Consider three components when evaluating plant efficiency:
•Identify causes of loss (e.g., lack of demand, labor problems, line breakdown)
•Identify causes of loss (e.g., calibration, labor performance, poor maintenance, other plant
functions)
•Waste: measure what percentage of raw material inputs is lost in producing output
•REMEMBER: When asked to analyze “capacity utilization” of a plant, consider ALL three of the
above points!
SUPPLIERS
•Segment suppliers on basis of client’s needs (e.g., quality, cost, value-added, timeliness, JIT, service,
etc.)
•Identify key decision criteria in evaluating suppliers (e.g., low cost, high quality control, low defect
rates, quick turnaround times, etc.)
•Evaluate company’s relative bargaining power with suppliers based on % of supplier’s total sales