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Frameworks I wish I knew

List of frameworks to master most case studies
3nd EDITION

By Alexandre Clauzet 0
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Copyright © 2024 ALEXANDRE CLAUZET

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1 Growth

2 Profit decline

3 Pricing

4 Market entry

Summary 5 M&A

6 Private equity

7 Competitive response

8 Response to a new entrant

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Growth strategy
Specific questions of introduction
What growth ambition ? What timing ?
Realistic vs our market, our past performance, our competitors ?

Macro framework Growth initiatives Insights

Understanding of the price elasticity of
Increase prices demand. Very often, some segments
Increase price Personalize the pricing
sensitive than others

Launch new products or services Works well if a clear market gap is identified:
Expand into new geographies Product or service missing
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Organic growth Market expansion Develop new channels Absence in a country/region
Absence of a distribution channel
Target new customers
Launch a marketing campaign Customer segment not targeted
Brainstorm on organic
initiatives to generate growth
Optimizing current perimeter works well if:
Focus on wining categories/segments1
Sound knowledge of customers' KPCs
Increase volumes Offer optimization Develop cross sell and upsell
Presence of segments with different
Improve the product/service on KPCs levels of attractiveness

Personalize churn management

Develop a loyalty program Maximizing client retention works well if
Brainstorm on M&A Client retention Favor long term contracts limited growth opportunities are available
opportunities to Increase switching costs
generate growth Improve customer service & experience

M&A works well with high growth ambition

2 External growth Acquire a competitor in a short timing but is constrained by:
Antitrust considerations
Resources capabilities
Competitors' responses
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KPC : Key Purchasing Criteria
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Profit decline
Specific questions of introduction
What % of profit decline ?
How does it compare vs previous years ? Vs main competitors ?

Macro framework Key questions Insights

How is the market segmented ? Understanding of the market fundamentals:

Market What was the market performance recently ? Recent market performance on each segment
Are we loosing or gaining market share ? Performance vs the market

Any price changes ? Frequent reasons for price decrease:

1 Revenues Price How does it compare with previous years ? Change in consumer's KPCs with more weight on prices
More focus on volumes and less on profits
How does it compare with the competitors ? Alignment with a competitor's prices

Identify whether Do we have a new competitor or a new substitute ? Frequent reasons for loss of volumes:
the decrease in profitability External Do any of our existing competitors change their value A new competitor has entered the market
An existing competitor has improved its value
driven by a revenue decline proposition recently ?
Volumes proposition on the customer's KPCs
The KPCs of the customers have changed and our client
Any change of customers' KPCs ? has not updated its value proposition
Internal Any change in our value proposition ? Our client had supply issues and did not deliver its
Any supply issues ? products/services to the market

Mix Any change in our segments mix ?

Understanding of the segment mix fundamentals:

Trends with our segment mix

Raw material
Variable costs Finished goods
2 Costs Understanding of the cost structure:
List of variable and fixed costs per nature
Staff i.e. for production and sales Focus on the biggest cost buckets

Identify whether
Fixed costs Distribution and transport Detailed costs breakdown with recent trends
Comparison with appropriate benchmarks
the decrease in profitability
driven by a cost increase Utilities i.e. rent, administrative expenses, utilities

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KPC : Key Purchasing Criteria
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Pricing strategy
Specific questions of introduction
N.a.

Macro framework Key questions Insights

More pricing power if:
What are the main features ? Strengths and weaknesses ? Unique features valued by customers
Any similar offers, products ? Any substitutes ? Low or absence of similar offers
1 Product What is the brand loyalty for the current offers ? Low brand loyalty for the customers1
Are there any switching costs with current offers ? Low switching costs for the customers1
Is there a patent ? Patent to protect our product
Understand and describe the Breakeven price +
product as precisely as possible markup
What are the variable and fixed costs ?
Any other CFs The cost-based pricing method provides a
Cost based pricing What is minimal price to breakeven ? minimal threshold for the offer pricing
Any standard markup on costs for similar industries/products ?
Price of competition
or substitute
+ adjustment What are the prices for our competitors for similar products ?
What are the prices of existing substitutes ?
2
Pricing Pricing vs competition Price adjustment:
Without any direct competitor, try and find
method Strength and weaknesses vs competition/substitutes ?
indirect competitors
Maximum price Brand loyalty/switching costs/customer habits
Brainstorm on each the customer is
pricing method willing to pay

Calculate the expected Willingness to pay What price customers would be willing to pay ? Proceed with a market study
market potential

3
Demand / Calculation of the market potential and total profitability
In case of pricing trade-off, usually prefer
the price that maximizes the market
supply impact based on the price estimated potential and the total profitability

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CFs : cashflows
1. For the current customers on the offers already available
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Market entry
Phase 1 : Assessment of market attractiveness and accessibility
Specific questions of introduction
What coherence with our current strategy ?

Macro framework Key questions Insights

Markets more attractive with:
What is the size of the market ? Larger size
Size How is the market segmented ? Limited segmentation of the market
Favorable situation
The market is attractive
1
Market Growth
What is the market growth rate ?
What are the main growth drivers ?
High growth rate
Sound growth drivers and accessible
attractiveness Any key market trends ? Clear positive market trends

Our recommendation is to
Key question to answer: Low number of identified risks
Risks What are the main risks of the market ?
Risks easily mitigable enter the market
Is the market attractive ?

Markets more accessible with:

Who are the suppliers ?
Supplier Any risk with the access to the suppliers ?
Limited concentration of suppliers
Easy access to suppliers

Unfavorable situation
2
Market Customer base
Who are the customers ?
How are they segmented ?
Low loyalty and low switching costs for The market is unattractive
accessibility What are the KPCs per customer segment ?
existing customers
or not accessible

Key question to answer: Limited or no competition

Who are the competitors Our recommendation is to
Is the market accessible ? Competitive What are their value propositions ? Our value proposition suits the clients'
landscape KPCs better than the competitors not enter the market
How does our value proposition differ ?

Limited or no barriers of entry

Barriers of entry Any barrier of entry ?
Barriers of entry easily surmountable

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KPC : Key Purchasing Criteria
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Market entry
Phase 2 : Strategy of entry
Specific questions of introduction
What coherence with our current strategy ?

5 main entry strategies

Strategic
1 Import & export 2 Organic growth 3 4 Joint venture 5 M&A
partnership
Direct import of the product Creation from scratch of a Establishment of contract with Creation of joint entity with a Acquisition of a competitor or
Description into the new market and sale local affiliate or a plant in a local partner to develop or local partner to develop or partner in the local market
to a local distributor or partner the new market market the products locally market the products locally
Key parameters to determine
the best entry strategy

Lowest time to market : Highest time to market due Time to find the right
Acquisition processes Acquisition processes
Rapidity1 only time for regulatory to the necessity to build all partner and establish all
are usually slow are usually slow
clearances + delivery time the business from nothing the partnership terms

Limited profits because

All the economic profits
the new entrant is only an
remain with the new Profits and costs are Profits and costs are All the economic profits
importer
Profits Limited costs, mostly
entrant shared with the local shared with the local and costs remain with
Potentially high set-up partner partner the new entrant
customs + transportation
costs
cost + FX currency costs

Hight complexity of In addition, to the

Highly feasible but not starting a business from presence of a target for
suitable to every industry scratch in a new market: Feasibility depends Presence of a partner for acquisition :
Feasibility e.g. heavy industry, car Different regulations mostly on the presence a joint venture Political risks
Language barriers of a strategic partner Financial resources
New culture Antitrust consideration

Low High 7
FX : Foreign exchange
1. Rapidity of the time to market
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M&A
Phase 1 : Assessment of the market attractiveness
Specific questions of introduction
What coherence with our current strategy ?

Macro framework Key questions Insights

Markets more attractive with:
What is the size of the market ? Larger size
Size How is the market segmented ? Limited segmentation of the market

What is the market growth rate ?

What are the main growth drivers ? High growth rate
Growth Any key market trends ? Sound growth drivers
Clear positive market trends
Suppliers
Who are the suppliers ? Limited concentration of suppliers
How much bargaining power for the Low bargaining power of the suppliers
suppliers ? A more attractive
Pricing is not the only KPC for the
Customers
customers
market is in favor of
1
Market Profitability
Who are the customers ?
How are they segmented ? a M&A operation
attractiveness What are the KPCs per customer
Limited or no competition
Absence of dominant competitors
segment ? holding the market power
Key question to answer: Competitors The value proposition of the target
How attractive is the Who are the competitors ? suits the clients' KPC better than the
market ? How the target value proposition competitors' offer
differs from the competitor's offer ?
Low number of identified risks
What are the main risks of the market ?
Risks Level of barriers of entry ?
Clear barriers of entry to protect the
market from new entrants

KSF What are the market KSFs ? Clear understandable KSFs

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KPC : Key Purchasing Criteria ; KSF : Key Success Factors
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M&A
Phase 2 : Assessment of the target attractiveness and expected synergies
Specific questions of introduction
What coherence with our current strategy ?

Macro framework Key questions Insights

Targets more attractive with:
What is the growth rate of the target ?
Financial Higher than market growth rate
What is the target market share ?
Target analysis How profitable is the target ?
High market share Favorable situation
2 Positive profit margin The market and the target
attractiveness Strategic What is the overall strategy of the target ? Clear strategy are attractive. There are
Has the target any competitive advantage ? Sustainable competitive advantage
positioning What is the client base ? Client base coherent with our products material synergies the
Key question to answer: management expects to
How attractive is the target ? Market dynamics
deliver
Network economies
Pricing rationalization
Market access
The expected value at stake with the Our recommendation is to
Operational Leverage customer relationships acquisition is equal to the total value of acquire the target
synergies Leverage distribution network the synergies x the probability to
Increase offering materialize the synergies
Economies of scale
Best practices The total value of the synergies depends on: Unfavorable situation
Increasing negotiation power Number of synergies identified
The value at stake for each synergy
The market or the target
Synergies Asset Capacity rationalization
Divesture of non-core assets
are unattractive and with
3 The probability to materialize the synergies limited or no synergies
analysis synergies Reduction of working capital depends on:
Unused debt capacity History of successful acquisitions for the
Financial company Our recommendation is to
Tax optimization
Key questions to answer: synergies Access to liquid capital market Experience of the management
not acquire the target
Are there any material synergies ? Strong rationale for the M&A
How confident are we to deliver Management Any experience of the management to Fair estimation of the value at stake and
the promised synergies ?
experience deliver synergies with past acquisitions ? the likelihood to deliver the value

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M&A
Phase 3 : Acquisition strategy, financing and post merger integration
Specific questions of introduction
What coherence with our current strategy ?

Macro framework Key questions Insights

4
Acquisition How confident is the management to deliver the synergies ?
Are there any financial constraints ?
Acquisition strategy based on the:
Management confidence to deliver the synergies
strategy What is the level of anticipated antitrust regulation risk ? Financial resources available
Antitrust considerations
Identify the best % of ownership
acquisition strategy How much financial resources are available for the acquisition ? 5% 100%
What is the valuation of the target ? Minority Joint venture Majority

Financing
shareholding shareholding
What price are we offering ?
5 What is the target financing structure ?
strategy Equity Low
Management confidence1
High

Debt
Validate the Other Financial resources
financing strategy
Limited Unlimited

How are we communicating internally and externally ?

Communication & risks What are the main execution risks identified ? Antitrust risk
How can we mitigate the risks ? High Low

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Post merger Business continuity
Do we have a project team to ensure business continuity after
the acquisition?
integration How experienced is the project team ?

Prepare for the

Do we have a project team to ensure synergies materialization
integration Synergies
after the acquisition ?
materialization How experienced is the project team ?

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1. Confidence in delivering the expected synergies
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Private equity
Phase 1 : Assessment of the market attractiveness
Specific questions of introduction
Rationales for the acquisition
Coherence with our current portfolio strategy

Macro framework Key questions Insights

Markets more attractive with:
What is the size of the market ? Larger size
Size How is the market segmented ? Limited segmentation of the market

What is the market growth rate ? High growth rate

What are the main growth drivers ? Sound growth drivers
Growth Any key market trends ? Clear positive market trends

Suppliers
Who are the suppliers ? Limited concentration of suppliers
How much bargaining power for the Low bargaining power of the suppliers
suppliers ? A more attractive
Pricing is not the only KPC for the
Customers
customer
market is in favor of
1
Market Profitability
Who are the customers ?
How are they segmented ? a private equity
attractiveness What are the KPCs per customer
Limited or no competition
Absence of dominant competitors operation
segment ? holding the market power
Key question to answer: Competitors The value proposition of the target
How attractive is the Who are the competitors ? suits the clients' KPCs better than the
market ? How the target value proposition competitors' offers
differs from the competitor's offers ?
Low number of identified risks
What are the main risks of the market ?
Risks Level of barriers of entry ?
Clear barriers of entry to protect the
market from new entrants

KSFs What are the market KSFs ? Clear understandable KSFs

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KPC : Key Purchasing Criteria ; KSFs : Key Success Factors
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Private equity
Phase 2 : Assessment of the target, expected synergies and financing strategies
Specific questions of introduction
Rationales for the acquisition
Coherence with our current portfolio strategy

Macro framework Questions Insights

Targets more attractive with:
What is the growth rate of the target ?
Financial Higher than market growth rate
What is the target market share ?
analysis How profitable is the target ?
High market share
Positive profit margin Favorable situation
What is the overall strategy of the target ?
Clear strategy The target is attractive with
Strategic Sustainable competitive advantage clear synergies and operational
Has the target any competitive advantage ?
positioning Coherent client base
2
Target What is the client base ?
Alignment with the market's KSFs
improvements levers
attractiveness Operational What margin of operational improvement ?
Many operational improvements of the
Cost reduction
Improvement Revenue enhancement
target are identified
Our recommendation is to
Key question to answer:
How attractive is the target ? Portfolio Presence of synergies with the rest of
acquire the target
Any synergies with the rest of the portfolio ?
synergies the PE firm portfolio
What valuation for the target ? Beyond synergies, higher value
Entry multiple creation with:
Exit multiple Lower acquisition price Unfavorable situation
ROI Low entry multiple The target is unattractive and
What price are we offering ?
with limited synergies and
3
Financing What is the target financing structure ?
Equity
Lower financing costs operational improvement levers
High financial leverage
strategy Debt Low cost of financing, notably cost of
Other debt
Any exit strategy ? Our recommendation is to
Key question to answer: IPO Higher selling price not acquire the target
How to optimize the value creation Trade sales High exit multiple
with the financing strategy? Secondary buy-out

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Competitive response
Specific questions of introduction
N.a.

Macro framework Questions / initiatives Insights

What are the main features ? Strengths and weaknesses vs

our offer ?
What is the competitor doing differently vs us ?
Price
Product
Technology Develop a precise understanding of
1 Product Production the new product and of what the
Marketing & communication competitor is doing differently
Distribution channels
Understand and describe the Customer experience
competitor's product or change Customer segmentation
as precisely as possible Is there a patent ?
Is the competitor gaining market share ? On which segments ?

Copy of the R&D of the competitors

Copy the innovation of the competitor
Hiring of the staff of the competitor
Antitrust considerations
Purchase the competitor
Culture
2 Solutions
Existence of another competitor
Merge with another competitor to form a market leader
Existence of synergies
Brainstorm on the best
responses on the market Sound knowledge of customers' KPCs
Improve our product or service on the KPC
Existence of improvement levers

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KPC : Key Purchasing Criteria
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Response to a new entrant

Phase 1 : Assessment of the risk for the incumbent player
Specific questions of introduction
N.a.

Macro framework Key questions Insights

What is the size of the market ?
Size How is the market segmented ?

What is the market growth rate ? Favorable situation

Develop a precise
Growth What are the main growth drivers ?
understanding of the
The new entrant does not
Any key market trends ? offer a better value
market, notably:
proposition or not on the
Competitive Who are the competitors and what are their MS ? The market's KSFs
1 Market landscape What is the level of differentiation of their offers ? The clients' KPCs
customers' KPCs

Customer base
Who are the customers and how are they segmented ? The risk for the incumbent
Key question to answer:
What are the KPCs for each customer segment ? player is low
What does it take to be
successful in this market?
Key success factors What are the other key success factors of the market ?

What is the competitor doing differently vs us? ? Unfavorable situation

Price The new entrant offers a
Product Develop a precise better value proposition
Technology understanding of the on the customers' KPCs
Production
new entrant, and how
2 New entrant Marketing & communication
its value proposition
Distribution channels The risk for the incumbent
Customer experience answers the market player is high
Key question to answer: Customer segmentation KSFs and the clients'
Does our new competitor have Is the competitor offering a better value proposition KCPs
what it takes to be successful ? on the customers' KPCs ? If yes for which segments ?

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KPC : Key Purchasing Criteria ; MS : Market Share ; KSF : Key Success Factors
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Response to a new entrant

Phase 2 : Reponses to limit the new entrant's threat
Specific questions of introduction
N.a.

Macro framework Initiatives Insights

Threaten to launch a price war Conservative strategies are more likely to

Ask the government to prevent the new succeed if:
entrant from entering the market The new entrant is a foreign company
Conservation Lobby the government for additional Clear history of political activism against
industry regulations new entrants
Acquire a competitor to gain additional The price war threat is credible
Increase the barriers of entry market power Presence of competitors to acquire
to prevent the new entrant
from joining the market
Optimizing current offer works well if:
Focus on wining categories/segments1
Sound knowledge of customers' KPCs
Offer optimization Develop cross sell and upsell
Presence of segments with different
Improve the product/service on KPCs levels of attractiveness1
3 Responses Defense
Personalize churn management
Develop a loyalty program Maximizing client retention works well if
Brainstorm on the best Protect the current Client retention Favor long term contracts limited growth opportunities are available
responses on the market market share Increase switching costs
Improve customer service & experience

Launch new products or services A clear market gap is identified:

Expand into new geographies Product or service missing
Offensive Develop new channels Absence in a country/region
Target new customer segments Absence of a distribution channel
Launch a marketing campaign Customer segment not targeted
Expand into new segments

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KPC : Key Purchasing Criteria
ost
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