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Anton

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8

Hypothesis

Hello everyone,

I just came across a market entry case where the client is considering expanding into new markets (new countries). The choice was between two countries (U.K & U.S).

My question is:

Would you recommend stating an opening hypothesis in this particular case (After drawing out a framework)

What could a good example be?

*Assuming the main objective is maximising revenue.

Thank you

Hello everyone,

I just came across a market entry case where the client is considering expanding into new markets (new countries). The choice was between two countries (U.K & U.S).

My question is:

Would you recommend stating an opening hypothesis in this particular case (After drawing out a framework)

What could a good example be?

*Assuming the main objective is maximising revenue.

Thank you

(edited)

8 answers

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Hi,

Stating your hypothesis in the very beginning of the case is a great way for .... REJECTION.

Why?

Interviewer wants to test your approach to structuring. Will he be able to test if you just state one hypothesis? The answer is no.

What can you do about it?

I would suggest that you should come up with a strong comparison table structure that would allow you to investigate each option and arrive to the right conclusion.

As we are focused on revenue I would suggest to use sales funnel approach and would investigate:

  1. MARKET: total addressable market (TAM) in each country
  2. AWARENESS: % of TAM that your company can address with marketing campaigns to build awareness
  3. CONSIDERATION: % of clients that will consider buying your product after viewing your advertising
  4. PURCHASING: % of clients who will actually buy your product after consideration and their average bill
  5. RETURNS: % of clients who may return your goods if they don’t like it (very relevant for e-commerce)
  6. LOYALTY: % of clients who will become loyal to you

That would be a MECE and smart way to address this case from revenue perspective (demand).

However it would be also smart investigating our capacity to satisfy this demand (supply).

Hope it helps!

Anton

Hi,

Stating your hypothesis in the very beginning of the case is a great way for .... REJECTION.

Why?

Interviewer wants to test your approach to structuring. Will he be able to test if you just state one hypothesis? The answer is no.

What can you do about it?

I would suggest that you should come up with a strong comparison table structure that would allow you to investigate each option and arrive to the right conclusion.

As we are focused on revenue I would suggest to use sales funnel approach and would investigate:

  1. MARKET: total addressable market (TAM) in each country
  2. AWARENESS: % of TAM that your company can address with marketing campaigns to build awareness
  3. CONSIDERATION: % of clients that will consider buying your product after viewing your advertising
  4. PURCHASING: % of clients who will actually buy your product after consideration and their average bill
  5. RETURNS: % of clients who may return your goods if they don’t like it (very relevant for e-commerce)
  6. LOYALTY: % of clients who will become loyal to you

That would be a MECE and smart way to address this case from revenue perspective (demand).

However it would be also smart investigating our capacity to satisfy this demand (supply).

Hope it helps!

Anton

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Hi Anonymous,

Not sure if you are asking the right question.

Even though Victor Cheng offers a lot of excellent advice, including a strong focus on the hypothesis-driven approach (which really helps many candidates sharpening and focusing their thinking along the case!), stating a hypothesis at the very beginning of the case usually turns out to be more counterproductive than helpful.

Unless you are an experienced hire with a strong focus on exactly that one case question to discuss, stating a hypothesis right at the beginning of the case interview is essentially nothing else than poaching with a stick in the dark and guessing around. And here you are: you are perfectly set for a highly unstructured and confusing start into your case! (Please note that even as experienced hire, you might be completely wrong with your hypothesis, especially in the slightly artificial case interview world - so I would not even strongly recommend the early hypothesis there)

However, at the same time it's also a matter of defining 'hypothesis'. If you look at your structure at the beginning of the case interview, it is basically the connection between the current client situation and a specific goal you want to achieve. In other words, this initial structure is also a kind of hypothesis which elements you need to consider and analyze in order to clearly understand the root cause and develop a solution for that. So essentially you can also consider your structure as some kind of hypothesis.

Apart from that technicality, the correct time to explicitly state a hypothesis during your analysis phase is when you have collected some initial data and you start 'connecting the dots'. Once some distinct pieces of your analysis guide you into one specific direction, then it's the correct time to explicitly state your hypothesis and focus in on 'verifying' (in the non-scientific way) your hypothesis!

Hope that helps - if so, please be so kind to give it a thumbs-up with the green upvote button below!

Robert

Hi Anonymous,

Not sure if you are asking the right question.

Even though Victor Cheng offers a lot of excellent advice, including a strong focus on the hypothesis-driven approach (which really helps many candidates sharpening and focusing their thinking along the case!), stating a hypothesis at the very beginning of the case usually turns out to be more counterproductive than helpful.

Unless you are an experienced hire with a strong focus on exactly that one case question to discuss, stating a hypothesis right at the beginning of the case interview is essentially nothing else than poaching with a stick in the dark and guessing around. And here you are: you are perfectly set for a highly unstructured and confusing start into your case! (Please note that even as experienced hire, you might be completely wrong with your hypothesis, especially in the slightly artificial case interview world - so I would not even strongly recommend the early hypothesis there)

However, at the same time it's also a matter of defining 'hypothesis'. If you look at your structure at the beginning of the case interview, it is basically the connection between the current client situation and a specific goal you want to achieve. In other words, this initial structure is also a kind of hypothesis which elements you need to consider and analyze in order to clearly understand the root cause and develop a solution for that. So essentially you can also consider your structure as some kind of hypothesis.

Apart from that technicality, the correct time to explicitly state a hypothesis during your analysis phase is when you have collected some initial data and you start 'connecting the dots'. Once some distinct pieces of your analysis guide you into one specific direction, then it's the correct time to explicitly state your hypothesis and focus in on 'verifying' (in the non-scientific way) your hypothesis!

Hope that helps - if so, please be so kind to give it a thumbs-up with the green upvote button below!

Robert

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Hi!

clear answer: no.

Much better approach would be to first verify what the objective is, and then outline how you can compare the two options with respect to that objective.

Cheers, Sidi

Hi!

clear answer: no.

Much better approach would be to first verify what the objective is, and then outline how you can compare the two options with respect to that objective.

Cheers, Sidi

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Hi,

You can have initial hypothesis at the beginning to you have to make sure that your framework is designed/tailor made to test the hypothesis.

Also hypothesis can be developed in several stages during the case depending on the new data and analysis that you did.

Example of initial hypothesis at the start of the case:

Q: Profit decline but sales remain the same

Potential Hypothesis: Issue is on cost, product mix (if more than 1 product)

Framework: Focus on investigating cost structure and the changes in product mix

Hi,

You can have initial hypothesis at the beginning to you have to make sure that your framework is designed/tailor made to test the hypothesis.

Also hypothesis can be developed in several stages during the case depending on the new data and analysis that you did.

Example of initial hypothesis at the start of the case:

Q: Profit decline but sales remain the same

Potential Hypothesis: Issue is on cost, product mix (if more than 1 product)

Framework: Focus on investigating cost structure and the changes in product mix

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Hi there,

This is always a very debated point ;)

There is nothing wrong with stating a hypothesis after you presented the initial structure.

However:

  1. It is not compulsory to do so. In your case, you could simply say that you want to explore the elements listed in your structure to see which market meets the objective of the client. Given the goal (which you should have verified) that will lead you to identify the right target
  2. If you state the hypothesis, it is critical that you explain how you want to verify the hypothesis and ask for information related to that.

If the interviewer for example asks where you want to start in a cost analysis, you could answer:

“Well, costs can be divided into fixed and variable costs. Given the initial information I received, my hypothesis is that this could be a fixed cost problem; to verify this, I would like to know how fixed and variable costs changed. Do we have any information on that?”

What I would not do in the case you presented is to state as hypothesis that the best market is – say – the US. That hypothesis is too broad and doesn’t bring any benefit to the analysis.

Instead, assuming your first point is an industry analysis, you may state that your hypothesis is that the US market is attractive and ask information on the points you listed to verify it.

Best,

Francesco

Hi there,

This is always a very debated point ;)

There is nothing wrong with stating a hypothesis after you presented the initial structure.

However:

  1. It is not compulsory to do so. In your case, you could simply say that you want to explore the elements listed in your structure to see which market meets the objective of the client. Given the goal (which you should have verified) that will lead you to identify the right target
  2. If you state the hypothesis, it is critical that you explain how you want to verify the hypothesis and ask for information related to that.

If the interviewer for example asks where you want to start in a cost analysis, you could answer:

“Well, costs can be divided into fixed and variable costs. Given the initial information I received, my hypothesis is that this could be a fixed cost problem; to verify this, I would like to know how fixed and variable costs changed. Do we have any information on that?”

What I would not do in the case you presented is to state as hypothesis that the best market is – say – the US. That hypothesis is too broad and doesn’t bring any benefit to the analysis.

Instead, assuming your first point is an industry analysis, you may state that your hypothesis is that the US market is attractive and ask information on the points you listed to verify it.

Best,

Francesco

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My view is that your framework is actually your hypothesis. It's a bit nuanced, but bear with me :)

Your framework is your structure for approaching the problem. It consits of a few main areas you'd like to look at. Inherent in your framework is a view that "If I answer A, B, and C, then we have an answer"

So, for market entry:

1) If the market is big, and it's growing, then we still want to considering entering

2) If #1 = yes, then let's see if it's attractive...can we win there? Is our product good/better than our competition's? Etc. If yes, let's definitely consider entering.

3) If #1 and #2 = yes, then, when we do enter, are we sure we can win? I.e. do we have the right plans. Will implementation actually pan out? Do we have the expertise, capital, etc.? In other words, if #2 is the thearectical, #3 is the reality.

Then, your summary becomes "I believe we should enter the market, if we can prove it's a good market, the it's attractive to us specifically, and that we will win it".

^Now this is a hypothesis :)

My view is that your framework is actually your hypothesis. It's a bit nuanced, but bear with me :)

Your framework is your structure for approaching the problem. It consits of a few main areas you'd like to look at. Inherent in your framework is a view that "If I answer A, B, and C, then we have an answer"

So, for market entry:

1) If the market is big, and it's growing, then we still want to considering entering

2) If #1 = yes, then let's see if it's attractive...can we win there? Is our product good/better than our competition's? Etc. If yes, let's definitely consider entering.

3) If #1 and #2 = yes, then, when we do enter, are we sure we can win? I.e. do we have the right plans. Will implementation actually pan out? Do we have the expertise, capital, etc.? In other words, if #2 is the thearectical, #3 is the reality.

Then, your summary becomes "I believe we should enter the market, if we can prove it's a good market, the it's attractive to us specifically, and that we will win it".

^Now this is a hypothesis :)

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Hi,

The topic of using a hypothesis is indeed a very tricky one. In general, if you did not receive information during the case prompt, or have significant industry expertise, stating a hypothesis at the very beginning is likely to be counter-productive and does not work at all for some case types.

For the case type that you have specified, you should rather think about it from the perspective, what would be the key drivers of the decision of what would be the most attractive market to enter given the client's situation and objectives. If you are the decision-maker, what factors could sway your decision to go for the US market vs. the UK market?

Once you have detailed a solid framework outlining these factors and you have started to receive some information, a hypothesis could be leveraged to guide your thinking and information gathering. However, if you want to do so its critical that you specify what are the things you need to look at to confirm the hypothesis leveraging the framework that you have developed.

-A

Hi,

The topic of using a hypothesis is indeed a very tricky one. In general, if you did not receive information during the case prompt, or have significant industry expertise, stating a hypothesis at the very beginning is likely to be counter-productive and does not work at all for some case types.

For the case type that you have specified, you should rather think about it from the perspective, what would be the key drivers of the decision of what would be the most attractive market to enter given the client's situation and objectives. If you are the decision-maker, what factors could sway your decision to go for the US market vs. the UK market?

Once you have detailed a solid framework outlining these factors and you have started to receive some information, a hypothesis could be leveraged to guide your thinking and information gathering. However, if you want to do so its critical that you specify what are the things you need to look at to confirm the hypothesis leveraging the framework that you have developed.

-A

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Hello!

Nope!

First I would check their targets, and then make the full tree checking feasibility for each of the target KPIs for each market.

Best,

Clara

Hello!

Nope!

First I would check their targets, and then make the full tree checking feasibility for each of the target KPIs for each market.

Best,

Clara

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