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Ian

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2

Cost revenue and entry strategy

My question is: How can you analyse the financial aspect of the entry before defining the entry strategy because different strategies will have different cost / revenue implications. At the same time, you can't decide on whether to enter the market or not without having a good view on the financials in that same market.

My question is: How can you analyse the financial aspect of the entry before defining the entry strategy because different strategies will have different cost / revenue implications. At the same time, you can't decide on whether to enter the market or not without having a good view on the financials in that same market.

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Hi Abed,

When answering complicated questions (i.e. strategy consulting) you can't boil the ocean and do everything at once! Therefore, you have todetermine:

First - Is the market as whole attractive?

Is it big? Growing? Do companies have healthy margins? Are there no price wars going on?

Second - Can we win in the market?

Is our product, in the eyes of the customer, better than that of the competition? If we enter, we better than the competition?

Third - Operationally/Executionally, what actually happens?

How to we enter (your question)? Which strategy will meet our objectives the best? Can we actually pull it off (do we have the money, prior expertise, environment knowledge/understanding, etc.)?

^The Third point is your point. You're right, you're just too early!

Hi Abed,

When answering complicated questions (i.e. strategy consulting) you can't boil the ocean and do everything at once! Therefore, you have todetermine:

First - Is the market as whole attractive?

Is it big? Growing? Do companies have healthy margins? Are there no price wars going on?

Second - Can we win in the market?

Is our product, in the eyes of the customer, better than that of the competition? If we enter, we better than the competition?

Third - Operationally/Executionally, what actually happens?

How to we enter (your question)? Which strategy will meet our objectives the best? Can we actually pull it off (do we have the money, prior expertise, environment knowledge/understanding, etc.)?

^The Third point is your point. You're right, you're just too early!

Book a coaching with Henning

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Usually Market Entry cases are kept at a high level and ask "should I enter this market or not", rather than "what is the best market entry strategy".

For the first case, you can make high-level assumptions: fixed cost for the entry, number of items sold, margin per item, etc. This allows you to assess overall profitability of the case.

If you are faced with the second question, you need to bite the bullet and define 2-3 different options and then make separate assumptions for each to get to an overall profitability per strategy that you can then use as one of the decision making criteria when deciding which strategy to pick.

I hope this helps. Let me know if not.

Usually Market Entry cases are kept at a high level and ask "should I enter this market or not", rather than "what is the best market entry strategy".

For the first case, you can make high-level assumptions: fixed cost for the entry, number of items sold, margin per item, etc. This allows you to assess overall profitability of the case.

If you are faced with the second question, you need to bite the bullet and define 2-3 different options and then make separate assumptions for each to get to an overall profitability per strategy that you can then use as one of the decision making criteria when deciding which strategy to pick.

I hope this helps. Let me know if not.

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