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Case: How should the client evaluate the entry of new competitors?

Anonymous A

Hi everyone,

I have recently come across with the following scenario, and I would like to know how would you approach it?

1) Natural Gas company (the client) that has 100% MS in Europe, what is the market size?

Future: The market is liberalized in the short-term
2) Which actors will be potential competitors and with which intensity will they enter?
3) How the final MS will be distributed (client and new competitors)

Thanks in advance

Pratik replied on 06/01/2017

Here is my take on this:

1) Market size can be calculated by breaking it down into two: Households and Commercial application. We will concentrate on households:

Number of households in Europe (Estimated numbers available) x Number of households with natural gas (Estimated at say 50%) x Average Consumption per household (Can be broken down further if required or estimated)

2) Your framework would be:

- Market attractiveness for outsiders to enter market (market size and growth rate (growth rate can be assumed as GDP 2-3%))

- Entry barriers (gas availability, brand, cost structure)

- Key success factors (access to supppliers, customer intimacy, cost advantages, branding)

- Positioning of competitors to enter market

- Competitive advantages of competitors thanks to synergies with other activities (electicity, services) - they can use existing client base and cost synergies, or use margins from their main business to leverage in this market.

3) This would depends on the information received from bullet point 2.

Hope this helps! Cheers

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