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Framework-Confusion: Market Entry, etc.

Case Interview Framework
Recent activity on Jan 13, 2017
1 Answer
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Alice asked on Jan 11, 2017


I have questions with regard to frameworks (I'm following Victor Cheng's profitability and business situations, realizing they can be adapted to the individual situation of course, if anyone would have time to answer/discuss, sorry in advance if it's long):

1.In a "what factors should client X consider when entering the market", I often start off by mentioning 1. i.Customers, ii.Product, iii.Company, iv.Competition. I often include the market-sizing as a first point under i.Customers since it seems most important to consider the market size and growth first (althogh I'm unsure whether this could perhaps be done as a seperate heading, but minor detail).. Questions that come to mind:

--Sometimes it feels more natural to say I'd like to look at potential Revenues and Costs first. But that would effectively be a mix of frameworks and I'd like to be consistent. When using the business situations, Revenues would be decided by i. Customers/Market Size and iv. Competition (since depending on nr of competitors, I would know our market share of total market and thus Revenue). Costs, in turn, would be decided under iii. Company. Especially financial feasability and investment costs would be determined here, which could also be a starting point. This feels like jumping around a lot in the framework to explain this to the interviewer though! Anyone else has the same "issue" and perhaps advice on how to do it? I could stick with this approach, but sometimes it feels very odd.

2. When given a Profitability-case, of course there are more external variables to consider, beyond the Profitability-framework. How do you guys do it here in the beginning; do you simply start with Profitability with no mention that you will later switch framework to business situations if needed? (Victor gave no initial mention that he would look at additional factors in one of his LOMS, but to me, it could appear to the interviewer that one forgot..) Perhaps one could say something like: "I'll start off with Revenues minus Costs, this is what I want to know within each, etc, etc. [give specific mention, e.g. segment break-down, over time, industry wide or not..], then I might switch to look at i. Customers, ii.Product, iii.Company iv.Competitors to analyze more in depth". That feels a bit awkward too though! In addition, you have effectively already touched upon the customers and competition then in the profitability.

Again, I realize there's no "right" answer here and that it depends on the situation. Mainly looking to see if anyone else is confused and whether there's any relief :) Many thank you // Xie xie // Danke schön

Feel free to answer here or PM me for further discussion


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Anonymous replied on Jan 13, 2017


I had the similar thoughts and I resolved them for myself through hypothesis-driven approach and more tailored frameworks (not those of Victor Cheng).

1. For market entry

I say, I’d like to analyze 4 things:

  1. Market (size, growth, segments, competition)
  2. Financials (investment cost for entry, revenue, cost, metrics (ROI, …))
  3. Way of entry (JV, green field, M&A,…)
  4. Capabilities (do we need new capacity, do we need to build new competences,…)

Then I say let’s prioritize. I wanna test the hypothesis that this is a good idea to enter. So, I start with market – if it is good (size, competition,…), I say ok, let’s move to financials, if not – let’s stop here and reject hypothesis. If Financials are ok, so let’s see how we can enter it and so on.

I give this reasoning when I present framework at the early beginning and only then start asking for data about the market.

2. For profitability

I say, I’d like to analyze 3 things:

  1. Revenues (market size, trends, competition, customer segments)
  2. Products (products themselves, pricing, features)
  3. Costs (FCs, VCs, benchmarking)

Then I say that 1) and 2) are mostly Volume and Price and I mark them this way when I present the framework.

Hope it makes sense.

Was this answer helpful?
Alice on Jan 16, 2017

Thank you! It really helps!!! Great new way of thinking and makes more sense. Now however I feel like Chengs frameworks are so engrained into my mind, so Ill work with them I think but just make everything very clear . Should be fine hopefully :)

Linlin on Oct 15, 2019

I wonder in your market entry framework, the market part, shall we move " segment" in the clarification at the beginning or at the start of the market part?

Linlin on Oct 15, 2019

cos if there is segment, then the following analysis should follow the segment instead of the whole market. that may influence the framework. like victor cheng's LOM case "moving"

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