Consulting frameworks are the keys that open doors to successfully solved business cases. Whether you’re preparing for your first case interview or you need a refresher before a big client meeting, these tried and tested formulas will help you make every session effective.
In this comprehensive guide, we’ll cover what the most fundamental consulting frameworks are, what they can be used for, and how to apply them. Save this page for future reference and use it as your cheat sheet to impress your consulting clients.
What Are Consulting Frameworks?
Consulting frameworks are tools designed to solve a business problem. They can be used as ready-made cheat sheets to work with various businesses across industries, or customized to more specific cases. Once you learn how to apply them confidently, you can mix and match these frameworks for maximum impact or even create your own versions of them.
The aim of these frameworks is to break down the problems and challenges your clients are facing into what we call an issue tree. This way, you can get the full picture of where the business you’re consulting stands and look further into the branches of this issue tree to find the root cause of the problem. It’s not uncommon for consultants to uncover multiple issues in their first consulting session with a client which may be disjointed or all connected to the same theme.
The overarching principle that these frameworks are based on is the MECE (pronounced as mee see), in other words, mutually exclusive and collectively exhaustive. It means that while segmenting an issue, you need to separate all influencing factors without any overlap and make sure you cover all areas without exception.
Consulting processes build upon this fundamental logic so that consultants don’t miss any important details while also striving to get to solutions as efficiently as possible. Despite the common misinterpretation of MECE that you might come across in some sources, it’s not a framework by itself but the driving principle that all frameworks are based on.
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Why Should You Use Business Consulting Frameworks?
Consulting frameworks provide templates and suggestions as a starting point for your consulting sessions. They give you a roadmap to find clarity about any aspect of a business, no matter the size. They can immediately simplify the complexity of the problem and draw attention to what may be overlooked in client interviews. You should never underestimate the simplicity of a modeling strategy or framework, even if you feel like you’ve already covered the areas that they involve.
On the other hand, you can’t solely rely on these frameworks when solving business issues. Analytical thinking and asking the right clarifying questions are much more important for a successful case than simply leading your client through a framework. These tools provide a great starting point, but they often need to be customized or combined with other frameworks for them to be efficient.
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To make the most out of these templates, repeat them in as many practice situations as you can, so that you can learn what context they fit and how their impact can be maximized. The more confident you become using them, the sooner you can develop your own frameworks on the spot for an individual business case.
7 Consulting Frameworks For Case Interviews & Client Sessions
The profitability framework is one of the most common frameworks to use in cases related to finances. It’s designed to mathematically break down the problem around the profitability of a business and then look further into the qualitative aspects of it.
Here’s how it goes:
- Break down the profits of the business into revenues minus costs
- Break down the revenues into price per unit times number of units sold
- Break down costs into variable costs and fixed costs
- Break variable costs further down into cost per unit times units produced
Once you have your numbers straight, you can start looking into the cause and effect of these digits with other qualitative frameworks or further questions.
The 3Cs framework was developed by Japanese organizational theorist Kenichi Ohmae. It focuses on the three key drivers of success in business. The three Cs stand for customers, competition, and company, and can be broken down into the following elements:
- Customers: customer demographics, customer needs, size and growth rate of customer segments, price sensitivity
- Competition: the value proposition and brand of competitors, their market share and growth, and their financial health
- Company: product offering, profitability, core competencies, unique selling points, financial performance and resources
This framework provides a broad overview of the strengths and weaknesses of the business and gives a great starting point for your analysis. It helps you gain perspective on the business at an overall level to uncover more potential issues than what’s initially visible.
After you mapped up these key areas, you need to dig deeper into the ones which might carry the root cause of the central problem. You can use further frameworks that fit these individual functions to solve issues within the four components.
Mergers And Acquisitions Framework
There are various factors to consider before acquiring another business. The mergers and acquisitions framework helps break these components down into a clear thought process. There are two versions of this framework. The first one considers:
- The organizational values of the two businesses and their compatibility
- Their synergy in terms of operation
- Other variable factors that might influence the decision, such as feasibility, legal issues, or other cultural attributes
The other way to apply this framework is to look at the market characteristics, target business, buyer business, and the synergies and risks surrounding the merger. Within each of these components, we can further break down the case into the following subcomponents.
- Market: market size and growth, market profitability, threats imposed by the competition, market regulations
- Target business: financial position, assets and advantages, quality of the management team, target-buyer culture fit
- Buyer: the reason for the acquisition, financing, buyer’s acquisition experience, acquisition timing
- Synergies and risks: the value of individual and combined entities, cost synergies, revenue synergies, biggest risks of failure
As with any other consulting framework, you are of course encouraged to add more components to these clusters as you see fit.
4P/7P Marketing Mix
The 4P Marketing Mix is a classic marketing consulting framework first proposed in the 1960s by E. Jerome McCarthy. The four components it stands for are:
- Product: The product or service marketed
- Price: All pricing plans defined for the product being sold
- Place: Geographical location of the product sold and channels of distribution
- Promotion: The strategies used for promoting the product
Later, this model was expanded into the 7P Marketing Mix with three added components in order to analyze service-based products. These three other components are:
- People: The customers or clients as well as all other stakeholders involved
- Process: The flow of activities or the mechanism between customers and the business
- Physical evidence: Everything visible from the packaging to the service environment
The Marketing Mix is a great framework for planning and implementing marketing strategies, especially for market entry campaigns or product launches in competitive markets.
Porter’s 5 Forces Model
The Porter’s 5 Forces Model is a framework developed by Harvard Business School professor, Michael E. Porter. It’s designed to evaluate the strengths and weaknesses of the industry surrounding the business. The five components of this model are:
- Competitors: The rivalry surrounding the business
- Suppliers: The bargaining power of suppliers
- Customers: The bargaining power of customers
- New Entrants: The threat of new players entering the market
- Substitute Products: The threat of new products being launched on the market
By mapping out these five forces, we can understand the level of competition present in the industry and project the company’s long-term profitability.
Market Entry Framework
The market entry framework analyses the characteristics of a new market the business is planning to potentially enter. Taking a closer look at the capabilities of the business and the financial impact of this decision, adequate strategies can be developed for success. This framework can be broken down into four components, namely:
- Market: Market size, profitability, products present on the market, level of competition, regulations
- Client capabilities: Differences between the current market and the new one, the client’s experience in market entry strategies
- Financials: Current financial position, cost to enter the new market, ongoing costs after market entry, expected revenues and return on investments
- Entry strategy: Timing, speed, entering a single region versus the entire market, merger opportunities, management approach
There might be more than one potential solution to a market entry case. Prepare with as much prior research for your consulting session as you can, so that you can propose multiple market entry strategies and draw a comparison between them for your client.
Pricing Case Framework
The pricing case framework is used to take all important factors into account while determining the pricing plan of products. A data-driven decision on pricing can be made by looking at the product costs, the value the product provides, and the pricing strategies used by competitors. In order to break these quantitative and qualitative data points down, we can look at the following components:
- Cost-Based Pricing: fixed costs of all products, variable costs and number of units produced, profitability targets
- Value-Based Pricing: product features, financial, emotional, and other value these features bring to customers
- Competitor-Based Pricing: pricing plans of competitors, available substitute products, value comparison
These elements can be combined into an overall pricing strategy for all product variations, including upsells and special offers. The core business strategy of profitability or market share can also influence the final decision.
Each consulting case can be broken down into an issue tree from the broad overview of the case to the nuances. Even if it seems like you’ve reached the end of the road, there are always other ways for segmentation that can help continue your analysis all the way to the tip of those branches. You can consider internal and external factors, qualitative and quantitative data points, or financial and non-financial attributes in virtually every consulting framework.