Case Interview Frameworks

Updated: Jan 5, 2021

Types of frameworks

There are three key framework types that can help tackle the toughest of case interviews. Whilst it is possible to learn particular frameworks prior to interviews, using frameworks from memory can result in being penalised by the interviewer. Deploying one of the following framework types with bespoke parameters is all that is required to develop an exceptional answer.

The three framework types are; bucket, issue tree and matrix. All three allow for a methodical approach but are more effective when used to answer different types of questions.

Issue tree: Great for profitability questions and any market sizing elements. Each ‘root’ of the tree allows for isolation of the problem and clear analysis. Often this is used in conjunction with a bucket framework.

Matrix: Usually taking the form of a table but sometimes a pair of axis (BCG matrix). This framework is great when having to draw comparisons such as in competitor analysis or M&A suitability. The key is to use only the minimum necessary parameters in order to make a clean and simple comparison.

Bucket: The most commonly used framework, it is very good for finding the root cause and developing a good idea of the bigger picture. Laying this framework out at the start also provides a checklist to work through which should prevent any unexpected mental blocks.

Five Key Frameworks

1) Profitability framework

This framework takes the form of an issue tree (sometimes referred to as a logic tree), it isolates the clients profitability problem into its key components. Following its branches, it is easy to identify where the issue lies and visualise where it fits into the bigger picture. The branches of this issue tree satisfy the MECE principle and therefore, if followed correctly, it should lead you to the cause.

Often a case will require you to identify the root cause of an issue and then subsequently recommend solutions. In this scenario it is likely that a bucket framework will be required for the solution section.

A profitability question will normally contain a sentence such as “PepsiCo has experienced declining profits” and therefore should be easily recognisable. Any case involving profits or one of its components (revenues and costs) will require a profitability framework.

Three equations to learn:

  1. Profits = revenue – costs

  2. Revenue = units x price

  3. Costs = Variable costs + Fixed costs

Profits = revenue – costs

This is the overarching equation that you are looking at but as always you must dig deeper into each component of the equation to find the crux of the issue.

Revenue = units x price

Units can be increased by increasing the number of customers buying the current products (usually sales & marketing) or by increasing the number of products purchased by the current customer base (upselling).

Increasing the price of a product is usually the quickest way to increase profits but this will effect the number of units that can be sold at that price, the magnitude of the effect will depend on the elasticity of demand and alternatives available to the consumer.

Costs = variable costs + fixed costs

To increase profits variable costs can be reduced by reducing the costs of inputs per unit. Increasing buying power or increasing efficiency on a per unit basis, such as automating steps of the manufacturing process, are ways of acheiving this.

Fixed costs can be reduced by removing unnecessary costs or by maximising the efficiency of current resources. Relocating the office to a cheaper location is an example of reducing fixed costs directly and increasing manufacturing production to 100% from 80% capacity would reduce the fixed cost per unit.

2) General framework

Developed on a framework made popular by Victor Cheng, this general purpose framework is capable of being adapted to the majority of case interview questions. This framework can be an alternative to the growth and market entry frameworks below if you are short of preparation time and cannot learn all the suggested frameworks.

This case interview framework primarily serves as a checklist to ensure you cover all the relevant elements in the case. It is still important to remain disciplined and methodical by exhausting each point before moving onto the next.