Speaker 1: We are going to practice creating frameworks to various different types of case interview questions. Creating frameworks that are unique and tailored to a specific case may seem challenging, but by the end of the video, you will see how simple and repetitive they actually are. You don't need to memorize a million different frameworks in order to master case interviews. If you haven't watched my previous video explaining how to create frameworks, make sure to watch that video first. To quickly summarize, a framework is simply a tool that helps you structure and break down complex problems into simpler, smaller components. Think of a framework as brainstorming different ideas and organizing them into different categories. One way to develop a framework is to ask yourself what 3-4 things must be true for you to make a certain recommendation with 100% confidence. These 3-4 things will be the major components of your framework and you will explore these areas during the case interview. Instead of memorizing a million different frameworks, another approach is to memorize 8-10 broad business areas such as market, competition, company, customer, profitability, strategic alternatives, risks and mitigations, and creating your own area. When given a case, mentally run through this list and pick the 3-4 elements that are the most relevant to the case. This will be your framework. If the list does not give you enough elements, brainstorm and add your own unique elements to your framework. You'll likely use some combination of these two strategies in creating frameworks for case interviews. Let's practice creating frameworks by going through a few case scenarios together. All of these following questions come from the book The Ultimate Case Interview Workbook. For those interested, I've left a link to where you can get the book in the video description below. Let's get started with the first practice question. Pineapple Co. is a large producer of non-organic pineapples in the US. They are considering producing organic pineapples that are grown without the use of pesticides in order to enter the premium organic fruit market. Should they enter the organic pineapple market? This is a standard market entry case that is very common in first round interviews. Make sure you know how to do this type of case very well. To create a framework, ask yourself, what are the 3-4 things that need to be true for us to make a recommendation with 100% confidence? These things might include, the organic pineapple market is attractive. Pineapple Co. can capture meaningful market share from competitors. Pineapple Co. has the capabilities to enter the market. Pineapple Co. will be profitable from entering the market. By using these points as the major areas we want to explore, we can expand upon these areas to get the following framework. Organic pineapple market attractiveness. What is the market size? What is the market growth rate? And what are average profit margins in the market? Organic pineapple competitive landscape. How many competitors are in the organic pineapple market? How much share do these competitors have? And do these competitors have any competitive advantages or differentiation? Pineapple Co. capabilities. Does Pineapple Co. have the expertise to grow organic pineapples? Does Pineapple Co. have the distribution channels to sell these organic pineapples? Expected profitability. What are expected revenues? What are expected costs? And how long will it take to break even from entering this market? Notice that each main bullet in this framework corresponds to one of the statements we needed to believe to be true to recommend that Pineapple Co. enters the market. Also note the logical sequence of each of the main bullets. We first determine if the market is attractive. Then we determine if the market is easy or difficult to enter. Next we determine if Pineapple Co. has the capabilities to enter. And finally we determine if Pineapple Co. will be profitable if they enter the market. In this framework, as in all frameworks, the sub-bullets support each framework element. For example, let's take a look at the first framework element, organic pineapple market attractiveness. By knowing the market size, growth rate, and average profit margins, we will be able to determine whether the organic pineapple market is attractive. The same logical structure holds for all of the other framework elements. Let's move on to the next practice question. An electric car manufacturer has recently been experiencing a decline in profits. What is causing this decline in profits and what should they do to address this? This is a standard profit case that is very common in first round interviews. Make sure you know this type of case very well. Market entry and profit cases are the two most common types of cases you'll see in first round interviews. They are a quick and easy way for the interviewer to assess your capabilities to solve basic cases. To solve this case, we need to think about the decline in profits from both a quantitative and qualitative perspective. We want to know quantitatively what driver is causing the decline. In other words, is the decline in profits driven by a decline in revenue or an increase in costs or both? Next we want to know qualitatively why is this happening. We can look at factors such as changes among customers, competitors, or changes happening in the market overall. Let's take a look at the broad list of framework areas that we have memorized. Going through the list, we select the most relevant areas. For this case, that would be market, competition, customers, and profitability drivers. From this, we'll know both what is responsible for the decline in profits and why it is happening. Here's what our framework could look like. Drivers of profit, has there been a decline in revenue, either from quantity sold going down or prices going down? Has there been an increase in costs, either from variable costs increasing or fixed costs increasing? Customer, have customer needs changed? Have customers changed their purchasing habits? Or do customers view our company differently? Competitors, have new competitors entered the market? Have existing competitors made any recent strategic moves or changes? Are competitors also seeing a decline in profits? Electric car market trends, are there new technologies impacting the market? Are there new regulations impacting the market? For these cases, you'll typically want to start digging into the drivers of profit first. Once you have determined the driver causing the decline in profits, you'll then want to dig into understanding qualitatively why this decline is happening. Afterward, you'll brainstorm and develop recommendations to address the decline in profits. Let's move on. GamingCo has three casinos situated in Atlantic City. One of their competitors, Lucky Fun Casinos, recently opened up a new casino in the area. How should GamingCo react to the opening of this new casino? Let's take a look at the list of broad framework areas that we have memorized. Going through the list, we select the most relevant areas. When thinking about creating a framework for this case, it's useful to first determine just how threatening this new casino will be. Next, it will be important to determine how both customers and competitors will respond to this new casino opening. Finally, once we have collected all of this information, we can enumerate GamingCo's strategic options and decide which one makes the most sense based on the information gathered so far. Therefore, we select the following areas, competition, company, customers, and strategic alternatives. One potential framework could look like the following. New casino threat size. How large is this new casino? How close is this casino to one of GamingCo's casinos? Does this new casino have any differentiation or competitive advantages? Customer. How will customers perceive and react to this new casino? How likely are GamingCo's customers to switch to this new casino? Competition. Will competitors also open a new casino? Will competitors close their existing casinos? What else would competitors do? GamingCo's strategic options. Should GamingCo do nothing? Open a new casino? Close their existing casinos? Improve their existing casinos? Or do something else? Let's move on to our last practice question. JJR is a global private equity firm with over $100 billion in assets under management. They are considering purchasing a roofing tile supplier. Should they make this investment? For most private equity cases, you are most likely looking for an attractive, successful company to acquire. The private equity firm will then grow that company and sell that company later at a higher price to achieve a specific level of return on investment. It is rare that you will get a case in which a private equity firm is looking to acquire a poorly performing company to turn around and then resell at a higher price. Nevertheless, it is best practice to confirm with the interviewer what exactly the private equity firm's acquisition strategy is. For this case, we'll assume that the private equity firm is looking to acquire an attractive, successful company. If we ask ourselves, what needs to be true in order for us to recommend that the client makes this acquisition, the following would need to be true. The roofing tile market is attractive, competition in the market is not strong, the target company is attractive, and the acquisition will generate high returns. Therefore, one potential framework could look like the following. Roofing tile market attractiveness. What is the market size, what is the market growth rate, and what are average profit margins for this market? Roofing tile competitive landscape. How many roofing tile suppliers are there? How much share does each supplier have, and do any players have competitive advantages or differentiation? Company attractiveness. Is the company profitable? How much market share do they have, and do they have any differentiation or competitive advantages? Financial considerations. Is the acquisition price fair and reasonable? By how much can the client improve and grow the company? What is the expected return on the acquisition? At this point, you should begin to see how repetitive the process of creating frameworks can be. You'll likely want to practice creating more frameworks for more case situations, but as long as you use the robust strategies we covered in this video, you will be in great shape to create unique and tailored frameworks. If you found this video helpful, please help out by giving this video a like, subscribe for new videos, and also check out some of the other case interview videos on the channel.