Starting with "Analyzing the Industry"

Question

Dear community,

I've been reading many of your posts recently and I'm thankful for the community you have been able to build up, there are many insights that are priceless.

Nevertheless, there's one thing that I am not certain about, some experts agree that in order to enter in a market, understanding how it works is essential and can be seem as the first part (after clarifying the objectives), however, there are some other experts that mention that it seems like trying to boil the ocean, as the question is not actionable (no numbers at all).

My question is if I could start trying to quantify the size and trends of the industry in order to understand it, making the logic phase of trying to get actionable data from those insights and without giving the impression of boiling the ocean.

Thanks for your help

Answer 1

Hi Anonymous,

I agree with Vlad, you should always consider a market analysis in a market entry case and there are definitely numbers you can analyze there.

The reason why some candidates give the impression that they are boiling the ocean when looking at the market is that they are not connecting their structures to the goal of the client. If you are simply looking at size, growth, competitors etc because you have them in your checklist and without a specific rational, the interviewer will understand you are simply repeating a memorized structure and this will affect your performance.

If instead you are looking at, say, the size of the market and explain you want to do so to understand if the market has the potential to, say, generate $20M for our client - assuming that’s the goal - that will make your structure customized to the objective and provide a far better impression to the interviewer.

Hope this helps,
Francesco

Answer 2

Francesco said it all! The core of your structure should be the logic/criterion to answer the question ("Should we enter this market?"). Before having lined out the logic according to which the client's question can be answered with a clear YES or NO, analyzing the market/industry does not make any sense, since it is just a wishy-washy question game without a clear and quantifiable purpose. Starting with a "industry analysis" before having set and quantified the decision criterion to enter/not enter is the most unreasonable thing you can do.

So in essence:

Step 1: Map out the criterion according to which you will anser the question (this criterion is likely a mathematical expression/equation which needs to be true)

Step 2: Disaggregate the elements of your criterion into its numerical drivers

Step 3: Identify qualitative factors that influence each numerical driver ("Customer preferences", "Industry attractiveness" etc. are examples of such qualitative factors)

Step 4: Run the analysis to quantify each element of the criterion (see Step 1)

Step 5: Test if the criterion holds true and answer the client's question accordingly with YES or NO

I hope this helps!

Sidi

Answer 3

Hi,

Not sure if I understand your question.

First of all - analyzing the market has a lot of numbers - Size, growth rate, segmentation and its growth rates, industry-specific numbers like penetration for telecom, etc

If you are entering a certain market, analyzing this market is an essential part of your structure. You can not make a market entry decision without analyzing it.

Should it be part of clarifying questions? No, it should be the part of your overall structure

Best

Answer 4

Hey, I recently got an offer at Mckinsey. I'll be happy to give you my two cents and do some prep to help you out. Sh... (read entire answer)

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