January, 2010

Consulting Buzz words........       January, 2010

Back-of-the-envelope question : A type of case question, most often a market-sizing question, that asks you to make an educated estimate of something.  The back-of-the-envelope question received its name because the question used to start with, "You're on an airplane, with no books, phone, or any resources.  On the back of an envelope figure…. "An example: "How many pairs of boxers are sold in the U.S. each year?"

Barrier to entry : Factor (such as capital requirements, access to distribution channels, proprietary product technology, or government policy) that would inhibit a company when entering a new market.

Benchmark : Continuously analyzing the industry leaders and determining what they do better.  A comparison against the best to provide targets for achievement.

Bottom line : Gross sales minus taxes, interest, depreciation, and other expenses. Also called net profit, net earnings, or net income.

Brainteaser : A type of case question in which the interviewee is asked to solve a riddle or logic problem.

Cannibalize : To take (sales) away from an existing product by selling a similar but new product usually form the same manufacturer; also: to affect (an existing product) adversely by cannibalizing sales.

Capital : Cash or goods used to generate income.
Case question : A fun, intriguing, and active interviewing tool used in consulting interviews to evaluate the multi-dimensional aspects of a candidate.

Core competencies : The areas in which a company excels.
Cost of goods sold (COGS) : On an income statement, the cost of purchasing raw materials and manufacturing finished products.

Cost-based pricing : A pricing strategy in which a product or service is priced according to the cost of producing, manufacturing, or otherwise creating the product or service.  R&D and COGS are the major determinants in the pricing strategy.

Cost-benefit analysis : A technique designed to determine the feasibility of a project or plan by quantifying its costs and benefits.

Depreciation : A decrease in estimated value.

Distribution channel : Means by which a producer of goods or services reaches his or her final users.

Economy of scale : Reduction in cost per unit resulting from increased production, realized through operational efficiencies.