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Strategy & Consulting - Compendium - DMS - IIT - Delhi
Strategy & Consulting - Compendium - DMS - IIT - Delhi
Strategy & Consulting - Compendium - DMS - IIT - Delhi
CONSULTING
COMPENDIUM
CONTENT
1. What is Strategy……………………………………………………………………………...3
2. What is Consulting……………………………………………………………………...........5
3. Strategic Frameworks…………………………………………………………………..........8
4. Guesstimates……………………………………………………………………...…………23
5. Interview Questions…………………………………………………………………………23
1. What is Strategy?
Strategy refers to a plan or course of action that is designed to achieve a specific goal or set of
objectives. It involves identifying and analyzing potential opportunities and threats, and then making
decisions about how to best allocate resources and allocate efforts to achieve the desired outcome. A
good strategy should be clear, actionable, and flexible, and should take into account both short-term
and long-term goals. It should also be aligned with the overall mission and vision of the organization.
Ultimately, strategy is about making smart, strategic decisions that will help an organization achieve
its goals and remain competitive in the marketplace.
The process of strategic management includes several key steps: setting strategic goals, analyzing the
organization's internal and external environment, developing a strategy, implementing the strategy,
and monitoring progress. The goal of strategic management is to create a competitive advantage for
the organization and achieve long-term success.
Effective strategic management requires a deep understanding of the organization's industry and
market, as well as the ability to anticipate and respond to changes in the business environment. It
also requires strong leadership, a clear vision, and a culture that supports innovation and continuous
improvement.
Strategic management is not a one-time event but a continuous process that requires regular monitoring
and adjustments to ensure that the organization stays on track and remains competitive. By taking a
strategic approach to management, organizations can achieve greater success, improve their
performance, and increase their chances of long-term survival and growth.
2. What is Consulting?
Consulting is the process of providing expert advice and guidance to organizations, businesses, and
individuals. Consultants are professionals with specialized knowledge and skills in a particular field
who work with clients to identify and solve problems, improve performance, and achieve their goals.
Consulting can encompass a wide range of industries and disciplines, including management, finance,
marketing, technology, and human resources.
The consulting process typically involves analyzing data, identifying key issues, developing
recommendations, and implementing solutions. Consultants may also provide training, coaching, and
ongoing support to clients to ensure that the solutions they propose are successful. Consulting is an
important tool for organizations and businesses looking to improve their performance and achieve their
goals.
1) Strategic thinking: Consultants must be able to analyze complex problems and develop
effective solutions. They must be able to think critically, evaluate options, and make sound
decisions.
3) Project management: Consultants must be able to plan, organize, and manage projects
effectively. They must be able to set goals, develop timelines, and ensure that projects are
completed on time and within budget.
4) Problem solving: Consultants must be able to identify problems and develop effective
solutions. They must be able to think creatively and outside of the box to find new and
innovative solutions.
5) Technical expertise: Consultants must have a deep understanding of the industry or field in
which they are consulting. They must be able to apply their knowledge to help clients achieve
their goals.
6) Leadership: Consultants must be able to lead teams and manage people effectively. They must
be able to inspire, motivate, and guide team members towards success.
7) Interpersonal skills: Consultants must be able to build strong relationships with clients and
stakeholders. They must be able to understand and anticipate the needs of their clients, and
must be able to provide them with the support they need to achieve their goals.
9) Self-motivation: Consultants must be self-motivated and driven. They must be able to work
independently, and must be able to set and achieve their own goals.
10) Continuous learning: Consultants must be willing to continuously learn and grow. They must
be open to new ideas and perspectives, and must be willing to embrace change.
3. Strategic Frameworks
Frameworks are helpful tools that aid in problem analysis, thought organisation, and communicate
recommendations. You can create a roadmap for success using business frameworks to help you
explain goals through effective business writing. You can scale a more comprehensive conceptual
framework to suit your needs. A business framework also provides you with a location to start and a
vocabulary that you can modify to match the objectives of your client.
We shall examine following business strategy frameworks for consulting in this compendium:
They can also get advice from independent SWOT experts, investors, or rivals on whether a business,
product line, or industry might be strong or weak and why.
Every SWOT analysis will include the following four categories. Though the elements and
discoveries within these categories will vary from company to company, a SWOT analysis is not
complete without each of these elements:
Strengths: Strengths describe what an organization excels at and what separates it from the
competition: a strong brand, loyal customer base, a strong balance sheet, unique technology, and so
on. For example, a hedge fund may have developed a proprietary trading strategy that returns market-
beating results. It must then decide how to use those results to attract new investors.
Weaknesses: An organization's weaknesses prevent it from operating at its highest potential. A bad
brand, higher-than-average turnover, high levels of debt, an inadequate supply chain, or a lack of cash
are examples of areas where the company needs to improve in order to stay competitive.
Opportunities: Opportunities are advantageous outside variables that might provide a company a
competitive edge. If a nation lowers its tariffs, for instance, a car manufacturer may export its vehicles
into a new market, boosting sales and market share.
Threats: Threats are things that could do something bad to an organisation. A corporation that
produces wheat, for instance, is at risk from a drought since it could ruin or diminish crop yield. Other
frequent dangers include things like escalating material costs, fiercer competition, a shortage of
workers, and so forth.
Now, let's delve into the SWOT Matrix Analysis, which involves examining the combinations of the
factors in SWOT Analysis:
presence (weakness) but identifies a growing trend of e-commerce (opportunity), it could invest
in improving its digital marketing and sales channels.
• Strengths-Threats (ST) Strategy: This strategy involves using the organization's strengths to
mitigate potential threats. For instance, if a company has a diverse product portfolio (strength),
it can better withstand competition from rivals (threat) by offering a range of products to cater
to different market segments.
• Weaknesses-Threats (WT) Strategy: This strategy aims to minimize weaknesses and avoid
potential threats. Organizations may need to address weaknesses such as poor customer service
or operational inefficiencies to mitigate the impact of threats such as increased competition or
economic instability.
Thus, the SWOT Matrix Analysis helps organizations develop strategic plans by matching internal
strengths and weaknesses with external opportunities and threats, enabling them to make informed
decisions and effectively manage risks and opportunities.
1. Stars: High growth, high share (like majestic lions) - Need heavy investment to maintain lead.
2. Cash Cows: Low growth, high share (like reliable milk cows) - Generate cash to support other products.
3. Question Marks: High growth, low share (like playful puppies) - Require investment to gain market
share or risk becoming...
4. Pet: Low growth, low share (like lazy old Pets) - Often drain resources and might need to be phased
out.
Think of the Product Life Cycle as a journey your products take. They're born (introduction), grow
(growth), mature (maturity), and eventually decline. The BCG Matrix helps you understand where
each product is in this journey and allocate resources accordingly.
• Stars: Often in the growth phase, requiring investment to become Cash Cows.
• Cash Cows: In the maturity phase, generating cash to fuel innovation (Stars) or support pets.
• Question Marks: Can be in the introduction or growth phase, needing investment to become
Stars or be phased out.
• Pet: Usually in the decline phase, draining resources and often phased out.
• Stars: iPhone in its early days, Apple Watch currently. High growth, high market share,
requiring ongoing innovation.
• Cash Cows: iPhone today, generating significant revenue to support new ventures.
• Question Marks: Apple TV+, Apple Arcade. High growth potential but need investment to gain
significant market share.
Applications:
Portfolio analysis: Helps assess the overall health and potential of a company's product portfolio.
Resource allocation: Guides decisions on where to invest resources for maximum return.
Strategic planning: Informs decisions about which products to grow, maintain, harvest (cash cows), or divest
(pet).
Limitations:
• Ignores other important factors like product life cycle and competitive landscape.
Value: Value refers to the firm's ability to deploy its resources and competences either to exploit opportunities
or to neutralize threats. Resources are thus valuable in so far as they make a contribution to either efficiency,
effectiveness, or differentiation and, in so doing, reinforce the competitive positioning of the company.
Rarity: The concept of rarity measures how rare a company's resources or capabilities are compared to those
of rivals. Rare resources, i.e. those stemming from conditions such as patents or special knowledge, allow for a
competitive benefit to a company via the creation of offerings that are hard to replicate by rivals.
Imitability: Imitability determines how competitors can easily imitate valuable and rare resources of a
company. Factors such as complexity, legal barriers, time, and tacit knowledge influence imitability. Resources
that are difficult to replicate establish a sustainable competitive advantage by deterring competitors.
Organization: Organization, or exploitation, is the analysis of how good the organization inside a firm is
aimed at attaining a superior use of valuable, rare, and inimitable resources. It includes those processes, systems,
leadership, and culture that will lead to effective resource usage that reinforces the competitive position of the
firm.
Let's apply the VRIO framework to analyze the competitive advantage of Tesla, Inc., an American electric
vehicle and clean energy company
In conclusion, Tesla's resources and capabilities pass the VRIO framework: its electric vehicle technology and
brand provide significant value to customers, are relatively rare in the industry, are difficult for competitors to
imitate, and the company is well-organized to exploit these advantages effectively.
A value chain is a strategic framework that helps businesses analyze and understand the series of
activities involved in delivering a product or service to the end customer. It encompasses all the steps
from raw materials sourcing to the final distribution of the product or service and everything in
between.
Primary Activities: These are the activities directly involved in the creation and delivery of a product
or service.
• Inbound Logistics: Procuring and receiving raw materials or inputs needed for production.
• Production: The processes involved in transforming raw materials into finished products or
services.
• Outbound Logistics: The activities related to storing and distributing the finished products to
customers.
• Marketing & Sales: Promoting and selling the product or service to potential customers.
• Services: Providing support and assistance to customers after the sale, such as installation,
maintenance, or customer service.
Support Activities: These are the activities that facilitate the primary activities and contribute to the
overall efficiency and effectiveness of the value chain.
• Firm Infrastructure: Administrative functions, including finance, accounting, legal, and
management.
• Human Resource Management: Recruitment, training, and development of employees to
support the operations effectively.
• Technology Development: Research and development activities, technological innovation,
and infrastructure development.
• Procurement: Sourcing and purchasing raw materials, components, or services necessary for
production.
Key Concepts:
• Value Addition: The primary goal of a value chain is to add value at each stage of production
or service delivery. This means that each activity should contribute to increasing the overall
value of the final product or service in the eyes of the customer.
• Cost Analysis: Value chain analysis helps businesses identify areas of cost efficiency and
opportunities for cost reduction. By understanding the cost drivers at each stage of the value
chain, companies can optimize their operations and improve profitability.
• Competitive Advantage: Analyzing the value chain helps businesses identify their strengths
and weaknesses relative to competitors. By focusing on activities where they can create unique
value or achieve cost leadership, companies can gain a competitive advantage in the market.
• Integration and Collaboration: Value chains often involve multiple stakeholders, including
suppliers, manufacturers, distributors, and retailers. Collaborating closely with these partners
and integrating their activities can lead to smoother operations, reduced costs, and improved
customer satisfaction.
Example:
Let's take the example of a smartphone manufacturer. Inbound logistics involves sourcing raw
materials like metals, plastics, and electronic components. Operations include assembling these
components into finished smartphones. Outbound logistics covers storing and shipping smartphones to
retailers or directly to customers. Marketing and sales involve promoting smartphones through various
channels, and service includes providing customer support and warranty services.
• Competitors or Rival Firms: This looks at the number and strength of your competitors.
The existing rivalry between firms can take a firm’s profits to zero and may lead to shut
down. In a competitive environment, a firm’s decision is highly influenced by what the
competitors do.
• Threat of New Entrants: The threat of new entrants to the market determines the
sustainability of the estimated market share. It is evaluated in terms of market entry barriers
which may be in the form of high fixed cost, product differentiation etc. Your position can
be affected by people's ability to enter yourmarket. So, think about how easily this could be
done.
• Threat of Substitutes: There is always a threat of substitute products replacing the existing
product(s) of a firm. A substitution that is easy and cheap to make can weaken your position
and threaten your profitability.
• Suppliers: This is determined by how easy it is for your suppliers to increase their prices.
How many potential suppliers do you have? How unique is the product or service that they
provide, and how expensive would it be to switch from one supplier to another? A
competitive market with limited suppliers brings with it a high level of bargaining power
of suppliers.
• Buyers: Here, you ask yourself how easy it is for buyers to drive your prices down. How
many buyers are there, and how big are their orders? How much would it cost them to switch
from your products and services to those of a rival? Are your buyers strong enough to dictate
terms to you? Multiple products of the same category give the buyers an advantage in
bargaining, thus the high bargaining power of buyers exists in multi-brand products.
Whilst the Porter's Five Forces model has its benefits there are certain considerations you should bear
in mind when using it. Many of these come from the fact that it was developed in an environment that
was quite different to the one organization find themselves operating in today.
Here’s an example of an analysis for the airline industry that was developed and framed for the
International Air Transport Association (IATA) by Michael E. Porter himself
PESTEL Analysis
A PESTEL analysis is a tool that allows organizations to discover and evaluate the factors that may
affect the business in the present and in the future.
PESTEL is an acronym for Political, Economic, Social, Technological, Legal, and Environment.
Political factors include government policies, leadership, and change; foreign trade policies; internal
political issues and trends; tax policy; regulation and de-regulation trends.
Economic factors include current and projected economic growth; inflation and interest rates; job
growth and unemployment; labor costs; impact of globalization; disposable income of consumers and
businesses; likely changes in the economic environment.
Social factors include demographics (age, gender, race, family size); consumer attitudes, opinions,
and buying patterns; population growth rate and employment patterns; socio-cultural changes; ethnic
and religious trends; living standards.
Technological factors affect marketing in (1) new ways of producing goods and services; (2) new
ways of distributing goods and services; (3) new ways of communicating with target markets.
Environmental factors are important due to the increasing scarcity of raw materials; pollution
targets; doing business as an ethical and sustainable company; carbon footprint targets.
Legal factors include health and safety; equal opportunities; advertising standards; consumer rights
and laws; product labeling and product safety.
Market penetration strategy is focused on selling your current product to the same people but in
larger quantities.
Here are some possible examples of how you can approach it:
• You may be more aggressive with your marketing but in the same customer segment
• You may also offer incentives for people to buy more of your product in exchange for a discount
• Change pricing strategy: Lower or increase the price of your product
• Identify a business partnership that can help you grow your market share
This strategy is all about developing new products and selling them to your existing customer
base. For example, makers of sports shoes have aggressively developed products such as sports
clothing to sell to the same group of people who were originally just buying shoes.
A great example of product development:
McDonald's seems to have done a pretty good job of weathering the changes in consumer taste
over the years. They've done this by supplementing their mainstream fast-food products with
new additions.
4. Diversification Strategy
Diversification is the riskiest of all 4 growth strategies. This quadrant involves selling new
products to new markets.
The risk lies in your lack of familiarity with either the product or the market. In spite of this,
diversifying can often result in substantial gains.
There are two types of diversification strategy:
• Related diversification: It happens when the company moves into a new market that has similarities
with the company’s existing market.
• Unrelated diversification: It happens when the company moves into a new market that has little to no
similarities with the company’s existing market.
A great example of related diversification:
Long ago, Apple was a brand that only appealed to serious graphic designers and a certain type
of tech geek. Then came the iPod (and eventually the iPhone).
These products were actually very different from anything that had come before (from Apple or
anyone else). They were designed from day 1 to appeal to a totally different customer base than
had previously been buying Apple products.
4.Guesstimates
Guesstimates are common in interviews, requiring candidates to make educated estimates based on intuition,
logic, and basic calculations. They assess structured thinking, numerical proficiency, critical thinking, and
communication skills. Interviewers use guesstimates to evaluate problem-solving abilities and analytical
prowess in a high-pressure environment.
Approaches to Solving Guesstimates:
1. Top-Down Approach:
The top-down approach involves starting with an overarching concept or population and then systematically
breaking it down into smaller components to arrive at an estimate. The key elements of this approach include:
• Identifying the Starting Universe: Begin with the entire population or the broadest possible
scenario relevant to the guesstimate.
• Segmentation involves applying appropriate filters and conditions, such as:
• Demographics (age, gender, income, ethnicity).
• Psychographics (attitudes, behaviors, values, e.g., smoker vs. non-smoker, dog vs. cat person).
• Geography (urban vs. rural, city tiers, country, continent) and Channels (offline vs. online, mobile
app vs. website)
2. Bottom-Up Approach:
The bottom-up approach involves starting from specific data points or low-level statistics and then building
upwards to arrive at an estimate. Common bottom-up approaches include:
• Household Approach: Estimate based on the number of households or families, which can serve as a proxy
for certain metrics like car ownership or appliance usage.
• Population Approach: Estimate based on the total population, extrapolating usage or consumption patterns
from demographic data.
• Bottleneck Approach: Consider constraints or bottlenecks that limit the capacity or availability of certain
resources, which can inform the estimation process.
Both approaches have their strengths and can be applied depending on the nature of the guesstimate and the
available information. The key is to leverage a structured approach, make reasonable assumptions, and
communicate your reasoning effectively to arrive at a logical estimate.
SWOT Analysis:
● Perform a SWOT analysis of Flipkart.
● What are the strengths and Weaknesses of Colgate?
● The candidates are advised to prepare for such questions in advance, i.e., to
practice SWOT analysis of a few top companies in India and the world.
BCG Matrix:
● Perform a BCG Analysis of Amazon.
● As Amazon is in a lot of business segments, its product portfolio is huge. The candidates
should clearly describe the four elements in BCG matrix Stars, Cash Cows, Question marks,
and Dogs for a given company.
(The candidates must be clear about why they put certain products or services in a particular
BCG matrix bracket and should be able to provide the rationale behind it.)
PESTLE Analysis:
● XYZ Solutions, an IT company, is planning to open its branch in the US.
● What trading policies impact business?
● What regulations must you follow, and have they changed in the last 5, 10, 20 years?
● How much does globalization affect your market share?
● What taxes must you follow, and how does it affect your service offerings (if at all)?
● Is the population demographic growing or slowing down, and if so, how is it affecting your
business?
● What technology is critical for your day-to-day operations?
● What new technology is available that could streamline decision-making and product
development?
● Do you depend on 3rd parties for any tech support or solutions?
Scenario Planning:
● What happens if we hire a new employee?
● What will happen if we purchase new equipment?