TKMC Case: Elevators

As you describe it, this is the longest version of this case format; normally too long for an oral interview, so it's super important to listen whether the question is about if (the client should enter the market) or how (to enter).

Let me answer your direct question 2) first, the how. This is the general "market entry strategy" case. For this strategy, you need the following:

1. Product strategy -- what are you going to sell? Your existing product as is, a high-spec or low spec version of it, or something else? (Hint: It needs to be at least adjacent, either new product for same customers or same product for new customers, otherwise it makes no sense; steel mills are rarely becoming tech cos. Compare the Ansoff-Matrix)
2. Geographical region -- where are you going to sell? Needs to be defined, often already part of the case question itself
3. Distribution strategy -- how are you going to sell or who is selling your product? Which channel? Own shops, specialty shops, big box retail, online, partnerships, etc. Depends on the product/service, for services or B2B it's Sales (inside sales, field sales, sales partners) instead of channel.
4. Promotion strategy -- how will customers know about your product? Often forgotten even by consultants :), but highly important. Marketing.
5. Pricing strategy -- what will you charge? In essence, you figure out steps 1-4, and then figure out max price point "allowed by" competition given quality of the client's offering.

Few comments:

• Customer (segment) strategy is missing. I tend not to include it, as to me it's above the framework, you need to figure it out before doing all 5 steps. Take into consideration if necessary.
• Competition - to me it's not a separate step as it's nothing you do or decide. I would bring it up as part of pricing. As consultants, you advise the client, and case result is rarely "competition is too strong, let's pack our bags and go home". One can get into any market with an attractive offer, and in 90% of cases it depends on the client's capabilities more than competition. Should be evaluated when testing market attractiveness.
• Some of these steps may be a given, i.e., part of the case question (e.g., "client wants to expand to the UK", or "Chinese solar company wants to expand to U.S."). Don't question the question, solve for the remaining variables.
• Do not overestimate clients' capabilities, clients are typically multi-billion-$ companies with lots of bureaucracy. Changing all 5 points from above won't work in practice. (New product in new region with new ...)
• The power of the status quo. One trick for you is to ask how the client is selling their current products right now in their home market. Chances are, approach in the new market will be kind of similar - if they sell detergent in supermarkets now, it's highly unlikely that selling online will be the solution in another market.
• If this sounds awfully similar to the 4P - it's because it's EXACTLY the same. Compare my answer here https://www.preplounge.com/de/consulting-fragen/mece-ways-to-grow-market-share-205 (Over time I found there are only 6 major case approaches that kill 95% of all case questions, so would be strange if this would be completely different :)

Basically memorize the 5 steps, and you're good!

Regarding your 1), you're completely correct, but I would prioritize it way more. Key points for me would be:

• (Long term) growth -- trumps everything. Power of compounding interest; even if current market size is small or (current) profitability is low
• Client capabilities - what does the client bring to the table? Should be either product capability (they can do X already so not hard to do Y, or, major R&D invention or something), or customer access (weaker, but still good -> cross-selling). Here I would compare it to the competition, as cababilities only make sense on a relative basis anyways.
• Your other points are all important, but if it's a really fast growing market and the client can play in it, you can directly go to step 2) and figure out the details.

I should shorten this answer, but rather get some sleep instead... Hope it still helps, good luck with your interviews!! :)

Hi Elisey,

I would personally not recommend to use a single framework for all the so-called business situations (M&A, Entry, New product, Operations etc). Although this would help to more easily remember the framework, it would make more difficult to present a customized structure when the interviewer asks the initial question. Moreover, since every business situations has some peculiar key elements (eg how to enter in a market-entry case, price valuation in M&A, etc), this could lead to completely miss one core bucket.

Based on my experience, it thus make sense to make the extra effort to learn 3-4 different structures for business situations (potentially with some elements in common), and be able to present from the beginning something ad hoc when needed.

Moving to the framework per se, using as an example market entry, this is how I would structure it:

1) Goal clarification. It is always good to start with the end in mind – thus what is the specific reason why you want to enter the market? Is it revenues, profits or specific synergies?

2) Industry. There are two macrovariables here.

• Key industry numbers/facts. This includes for the market and potential subsegments the following
  • Growth
  • Size
  • Barriers to entry
• Key industry players. This includes:
  • Customers segmentation
  • Competition
  • Occasionally for some cases: suppliers and substitutes.

You should present this area connecting with the goal, and not purely listing the elements to analyse as if it was a laundry list. The best way to do so is explain how a certain variable will help you to achieve you goal. Eg, if your goal is to increase revenues, don’t simply say “I want to look at growth, size and barriers”, rather “I want to look at growth and size – this will tell me if the market has the potential to provide enough revenues for our client. I would also like to check the barriers, to understand which are the obstacles in entering such a market and thus increase revenues”.

3) Company - Target objective feasibility. Here you want to check the fit between the client and the selected industries.

• Can our specific client reach its objective in the selected market (eg profits, revenues, market share, etc)?
• Are there positive or negative synergies in such industry?

In the first point, you will probably have to go through a profitability/revenue/cost framework, to calculate the effective result.

4) Best way to enter. Once you know the industry is attractive and you can reach you goal, you should consider the entry options.

• Which are the possible ways to enter the market? Usually you should consider (i) starting from scratch; (ii) M&A; (iii) Joint Venture or licencing
• Which option meets better our capabilities to enter the market? Each specific way to enter will require some different capabilities. If you start from scratch you may need skilled people in all the phases of the value chain; if you buy another company you may need less people, but more upfront capital, etc.

5) Risks and next steps. What are the major elements that we should further analyse based on the previous points (eg regulator decision, unexpected competitor reactions, potential wrong pricing in the new market, etc)?

This would include all important market metrics, presenting barriers to entry into the industry. I would not consider the price or the product in the first or second level for a market entry, but rather as a possible third level once reached step 3, when we have to understand if/how we can meet the client's goal.

Hope this helps,

Francesco

The number of hairdressers depends on three main factors: # of haircuts done per year, time spent per haircut and capacity of each hairdresser.

Number of haircuts: Number of haircuts depends on US population that gets a haircut and how often people get a haircut. I will first tackle the population. Obviously, people aged between 0-10 do not get haircuts. Even if they do, it is exceedingly rare. I assume health expectancy is 80 years and population is evenly distributed among each groups. That means, only 87.5% of the US population gets haircuts. I assume there are 160m males and 160m females in the US. That means, 140m males and 140m females gets haircut each year. I also assume males get a haircut once every month and females get once every three months, which means 12 haircuts per year for males and 4 haircuts per year for females.

This means, total number of haircuts per year is 140m * 12 = 1.68 billion for males and 140m * 4 = 560 million for females.

Time per haircut: I will assume a haircut per male will take 30 minutes while it will take 1 hr for females.

Capacity per hairdresser: I will assume there will be on average four hairdressers per shop and each will work for 40 hours per week. Assuming they will work for 50 weeks per year, capacity of each shop is 8000 worker hour.

Obviously, the number of hairdressers is total hours worked / capacity per hairdresser.

Total hours worked: 1.68 billion * 30 minutes (for males) + 560 million * 1 hr (for females) = 0.84 billion worker hours (for males) + 0.56 billion worker hours (for females) = 1.4 billion worker hours

Capacity per hairdresser: I calculated it above to be 8000 worker hours per year.

Number of hairdressers: 1.4 billion worker hours per year / 8000 worker hours per year = 175,000.

There are approximately 175,000 hairdresser shops, or 700,000 individual hairdressers working in the US.

Hi there,

I would start by asking some general questions to have a better feeling on the case:

1) Does our client provides this new service elsewhere? If not, does our client already has the capability to provide it without major investments?

2) How does this particular auction work? (i.e. it is like an "English auction"? / do we have some type of advantage for being an outside bidder? etc)

3) What dictates a good deal in the client's eyes? Does he want to breakeven in a certain timeframe? Does the contract has a timeframe?

Then I would move on to my structure:

I would like to analyze this problem in two steps: first the qualitative side and then the quantitative side. On the qual. side I would look for both external and internal conditions; external being market and competition and the internal being more about our client and the 5G technology we are going to provide.

Basically on the first step, I would like to analyze the size of the potential market, what companies will bid with us and what do they have to offer, I would look for possible barriers to enter and focus on what we can provide as well.

After gathering all the info I would focus on the quantitative side, probably through a breakeven analysis or use some type of target (i.e. client would like to see some return after X years, or the contract is only valid for a certain timeframe and our client would like to breakeven within that time).

--

The analysis I proposed could vary depending on the answers to the 3 first questions. (mostly for the bid)

If I understand your questions correctly, you are trying to figure out the difference between analyzing the overall market (or an industry), vs. the subsections of the market that a particular company is playing in. This kind of a dilemma happens most often in a market entry case. For e.g. - should a South African car manufacter (let's call it company X) enter the Indian market. For such a case, you usually have to answer the following questions:

Indian market:

1. How big is the Indian car market? How fast is it growing?
2. Which segments of the market are driving growth? (e.g. SUVs, electric vehicles, high-end cars)
3. What is the competitive landscape? Who is playing where?

Company X:

1. What kind of cars does X make? Is it big in any other businesses?
2. What are the key strengths of X? Why is it doing well? (e.g. superior brand, engine quality)

India entry strategy:

1. What are X's primary objectives of entering the Indian market? (e.g. profitability, market share)
2. Is there a match between X's strengths and the most attractive segments of the Indian market? (i.e. does X play or is strong in the same things
3. Are there any other benefits of entering the Indian market? For example, is there an existing relationship with an Indian supplier that would give X economies of scale?
4. Are the government regulations favourable? Can X easily find suppliers and serve customers (establish distribution channels, provide after sales service etc.)?

If you answer these questions, you will get a much clearer idea of the company's current market positioning as well as the structure of a target market.

Not a direct answer but I hope both your questions were addressed!