Management consulting frameworks for problem-solving

For business problems, decision-making, market conditions, a new entry, anything can be solved through management consulting frameworks for problem-solving to get results. In this case, we need to apply basic financial equations and mathematics to solve problems. Similarly, knowledge about the sector and function is also important. Do not need to know in-depth knowledge but overall knowledge. Like revenue, profit, loss, debt, market share, OpEx, CapEx, etc. The most important and widely used frameworks are.

SWOT

Strengths: The expertise, advantage in tech or manpower or business model, reputation, customer base, positioning etc. The unique capabilities which others don’t have. It needs to be maintained and monitored with upgradation. It gives an advantage in the market.

Weaknesses: The weaknesses may be in technology, manpower, customer base etc. It needs to improve to reach its target and grab the market. If the weaknesses last long then it could give competitors an opportunity to destroy your business or potential.

Opportunities: It depends upon external factors as well as the existing business’s weaknesses. Market changing, emerging tech, competitor’s backdated tech. etc. Through this, you could enter a market or launch a new service or product.

Threats: External factors like competitive pressures, economic downturns, regulatory changes, natural disasters, or evolving consumer behaviours. Sometimes pandemic threats. It arises suddenly or could arise in a few days.

Regular analysis of information and data. Internal data as well as external data. Knowledge about the condition of the market and potential future shifting. project management, product launch, new market entry, etc. are the places where this framework is used.

Porter’s five forces

Threat of New Entrants: Difficulties for new businesses, freelancers, products and services in the market. low barriers to entry, cost, brand loyalty, business model, etc. That is why creating high barriers like patents, copyrights, brand loyalty, feedforward etc. is necessary.

Bargaining Power of Suppliers: Influence of suppliers upon price and quality. Strong suppliers with few substitutes can exert power over an industry, leading to higher input costs. Weak supplier power may result from a large number of suppliers, readily available alternatives, and a lack of differentiation in their products or services.

Bargaining Power of Buyers: In simple, if the customer has multiple options then have strong bargaining power. Because of demand, price, cost etc., Low buying options mean low substitutes.

Threat of Substitutes: Similar benefits or almost similar benefits at a lower cost. Threats of substitutes or some weaknesses are reasons for being substituted in future. Availability of the thing is also there.

Rivalry Among Existing Competitors: Many competitors, exit barriers, and slow growth are the factors. Between existing companies or products. Differentiation, awareness of that, strategy etc. can lower the competition.

Understanding the competition, decisions that need to be taken, threats, and positioning analysis is the target of this framework. Rivalry competition, or in the red ocean market Porter’s framework is the proper framework to work with.

Demand & supply framework

Demand: According to the market we have to navigate everything. What the market needs or customer needs. Sometimes predicting the demand. Growth, determination, segmentation, technology, price, and customer needs all fit in the area. These give us the trigger for improving our product or service.

Supply: Supply means according to those demands we need to supply. Improvement of tech, innovation, price, supply chain, etc. improves the whole process and gives output according to the demand. Similarly, govt policies, rules etc. could impact these type of issues and also impacts the supply.

Cost: Various types of costs exist. Like variable costs, opportunity costs, operational costs etc. The costs impact the processes and fulfilling the demand. After that supplies to the customers accordingly. Maintaining costs is also tricky so regularly checking finances and reports is necessary.

Profitability framework

Revenue: Revenue of each and every product and service, overall revenue, subscription fee, selling, etc. Analysing the pattern of earning. The increase and decrease of the revenue are in this part.

Cost: Each and every product cost, cost of manpower, fixed cost, variable costs etc. for calculating profit and margin. So that margin and profit would increase and improvement is needed to decrease the costs.

Segmentation of customers, number of units sold, product services, etc. for calculating the improvement and doing further analysis.

3C & P framework

Customer: Target customer of the company, product and services, as well as, pricing according to the customer, segmentation of the customer according to their need and the demand of the market.

Product: Nature of the product like baby powder, shampoo, education, etc. The supply chain of the product. If new then identification of the product. Product cycle of the product as well as the value. Specific value the product will give the customers etc.

Company: Finacial structure, product line, capabilities, brand value, business model, strategy etc are in this part. It is like market domination, potential market domination, the position of the company in the market. Reputation which earned.

Competition: How many, how and who are the competitors? Product cycle improvement according to the competition, and behaviour. Entry barriers in the competition. Implementation of new tech or strategy in the competition is in this part.

PESTLE

Political: The influence of government policies, regulations, and political stability on an organization. Considerations may include tax policies, trade tariffs, government stability, and regulatory changes.

Economic: Economic factors pertain to the economic environment in which the organization operates. Key elements include inflation rates, exchange rates, economic growth, interest rates, and overall economic stability.

Social: Social factors involve the influence of societal trends, demographics, cultural attitudes, and consumer behaviour on an organization. Considerations may include population demographics, lifestyle changes, social values, and consumer preferences. The impact of some influencers in lifestyle or fashion makes an impact etc.

Technology: These factors encompass technological innovations and advancements that can impact an organization’s operations and competitive advantage. Considerations may include research and development, automation, and emerging technologies. Adaptation of the technology, implementation of the tech for making products faster etc.

Legal: Legal factors involve the influence of laws, regulations, and legal constraints on an organization. This includes labour laws, consumer protection laws, industry-specific regulations, intellectual property rights like patient, copyright etc.

Ethical: Environmental factors relate to sustainability, climate change, and ecological considerations. Organizations are increasingly evaluating their environmental impact and sustainability practices. Factors may include environmental regulations, climate change policies, and green initiatives.

BCG 2*2 matrix

BCG matrix is used for product analysis, product growth, future of the product depending upon the market of your company or organization. A graphical representation of products the axis is Market share (cash generation) [MS] vs Market growth rate (usage) [MGR]

Star product: This product is your strength, it’s giving you the highest gain as well as it will give you the highest gain in the future. High [MGR] and high [MS].

Question mark product: This type of having a good future doesn’t give you good gain so it needs to improve. High[MGR] and Low [MS].

Cash cow: Right now this is giving you the highest gain but in the future, there is no assurance. So better, you should take the profit of this product and utilize in star product and question mark product for their improvement. Low [MGR] and High [MS]

Dog: This is the product which you have to close because it doesn’t give you gain and it doesn’t have a good future. Low [MGR] and Low [MS]

Merger & Acquisition Mckinsey

Merger & acquisition is merging or taking over. In this case, two companies make the decision after discussing and analysing data, customers, finances and all to grow together in the market. Obviously after doing all of this at first need to place a framework for consideration. It is that framework where we calculate. In this calculation, the 3C & P framework applies. Suppose company A and company B want to merge then need to see both company’s 3C & P with stand-alone values and synergies, etc. The sheet would be like this (here)

3C & P is Customer, Company, competition and product. The company has internal matters and has to look at its finances, Like the balance sheet, P&L and cash flow, the Customer base should be different, Competition should be zero and the product should be different.

Now if the same type of product or customer is there then also merge. In this case positioning, customer analysis, costing, strategy etc. would be different so that profit could be earned.