Risks of entering a new market?

Question

Hey,

most frameworks employ capabilites & risks when entering a new market. Yet, most of the time these risks are pretty generic.

Do you have any ideas what risks can be faced when entering a new market besides regulatory challenges, cultural issues etc.?

I am thinking aboute especially on the company level itself such as:

- product cannibalization

- failure of the entry and adverse effects on current business

- reputation (?)

Thanks

Answer 1

They are usually generic because they aren't thinking about the capabilities or risks in the context of something.

Honestly, I hate the term capabilities in the context of the case interview. You have assets, competitive advantages, positioning, value proposition, etc. Those are how capabilities materialize.

So if I consider I am entering a new market, I don't care about the “marketing capabilities” or “product development capabilities". I care about whether the company's product / value proposition is aligned with the customer key purchasing criteria. I care on wether they have a low cost position / differentiation angle that can help them beat competition for certain customer segments. I care about them knowing how to develop a certain sales channel (that is relevant to reach the customer), or being able to provide on time delivery if they have an import operation.

Hope this helps!

Answer 2

Approach this systematically and think of risks in following layers/areas:

External
- PESTLE, Competitor response
Internal
- Customers
- Channel
- Product
- Technology & its impact
- People- poor leadership, shortage of skills, training , talent etc
- Investment/capital

Answer 3

If you want to think about it in a frameworked/structured way you can split it into social, political, and economic risks.

Additionally, you can think about competitor risk (current competitors changing their behavior or new ones coming in), customer risk (changing demands/preferences) or company risk (we aren't well positioned to succeed).

Importantly, when thinking about this, you need to tailor it to the specific market/client/situation.

Answer 4

Hello!

Feel free to PM me, one of the cases that I have prepared for my coachees and that we do in the prep is precisely about a complety a holistic market entry (and helps for all growth cases generically).

Cheers,

Clara