Favorability of the Markets by Competition

competition market entry
Recent activity on Apr 26, 2019
2 Answers
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Anonymous A asked on Apr 02, 2019

In the market entry cases, given the competitive picture, say one market is more concentrated with less players around 10%-15% , other is fragmented with many players with less shares. .How should we assess, the contcentrated is better since less players or fragmanted is better with no player has dominence. (Might depend on the case but can you plz elaborate on this) Thanks!

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Vlad
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replied on Apr 02, 2019
McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School

Hi,

It depends on the way you enter:

  1. If you are entering organically (from a scratch) - you should look for fragmented markets (Comps have less buyer power, less supplier power, less economies of scale and thus it's easier to compete on price)
  2. If you are entering non-organically (acquisition) - you should be looking for concentrated markets, since you want to buy an established player

Best!

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Serhat
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replied on Apr 26, 2019
BCG | Kellogg MBA |82% Success rate| 450+ case interview| 5+ year consulting | 30+ projects in ~10 countries

Not always but sometimes you can expect higher margins in concentrated markets compared to fragmented markets. (e.g. Airlines in US vs Europe)

Cheers
Serhat

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Vlad

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McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School
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