There are one or several new competitors entering the client's market, how will this impact our clients business?
How to best structure this?
Option 1) A pure profitability tree where I go deep in my rationale about how the size of potential decline in volume sold for example will depend on how different/good the new competitors are)
Option 2) Another structure could be a broader one with four key factors:
- Client (value prop, product- customer segment mix, company positioning, key success factors such as access to suppliers, cost advantages, branding etc)
- New Competitor(-s) (same subfactors as client, basically to understand how much does our business overlap, can we co-exist, do they have a better value prop than us etc)
- Market (growing? customer brand drivers/what do customers value? trends?)
This case was given to my friend in a McKinsey interview a month ago. There was a hospital specialized in cardiovasculeaur treatment and they just found out that another hopsital was going to be established near by. They were wondering how it was going to impact their business and what options they had in terms of competitor responses and what competitor response option that was recommended.