Overseas Market Growth - 1st Round BCG Type

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Information to be provided when asked:

• Manufacturing & logistics:
  • The client manufacturers in Indonesia, ships product to the US to store in its US warehouses, and then supplies from US warehouses.
  • Assume product lead time is not an issue, as the client keeps enough inventory in warehouses.
• Product: Assume product is a commodity and quality is similar to competitors’
• Pricing: Assume product is a commodity and therefore price is tagged to a public marker and the difference is very small amongst players
• Sales:
  • The client works with US distributors, while at the same time also has some direct sales to customers
  • The client has not been able to get long term contracts, only spot deals with smaller customers with duration no more than 12 months; while main competitors have locked in long term contracts with bigger customers
• After sales service:
  • Customer claim handling has been a big pain point for customers.
  • Competitors process claims within a week and some give unconditional refund.
  • The typical handling process for client can drag to a couple of months.

Additional information to be provided when asked:

• Sales: The client has hired a local US sales team. However, the sales team is compensated based on mostly fixed salary with a small portion of variable commission (similar to their colleagues in Indonesia), while competitors’ sales are paid on mostly commission.
• After sales service: There is no dedicated PIC for claim handling in the US; claims have to be approved by HQ in Indonesia which also require a lot of internal communication and coordination.

There are different ways to approach this question.

One approach the candidate can use here would be to think along the value chain - what is the client doing differently from its competitors at the various stages, from manufacturing, logistics (shipping + warehousing), selling, to after sales service.

Another approach is that, If the candidate struggles, can also ask the candidate to make an analogy to his/her own purchase. If he/she is going to buy from a potential supplier for a relatively expensive item, what are the purchase criteria? Typically the answer would include product quality, pricing, delivery time, and sales & services.

The key is for the candidate to really probe the root causes before jumping into suggestions (trying his/her luck).

Once the candidate identifies the key gaps in sales and after-sales service, an excellent candidate would probe further to uncover the why behind the gaps.

A strong candidate would start with the conclusion that the client should focus on the US market (reasons as mentioned above in Part 1). In order to achieve faster growth in the US, the client needs to change both:

• How they incentivize the sales team (suggest to move to a higher commission base, benchmark to competitors)
• How they handle the claims (create a role as person in charge in the US, and provide enough autonomy for faster and better claim handling)