Industry Life Cycle Growth Rates for Market Entry

Case Interview
Recent activity on Jan 09, 2019
2 Answers
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Anonymous A asked on Jan 09, 2019

I know it depends on different products and different industries, but when doing a case what is generally considered good growth rates when deciding to enter a market.

Introduction and Growth - double digit?

Maturity: is below 5% not worth it?

Ultimately my question is, provided the market size is big enough, and other qaulitative factors like regulation and supplier power etc. are ok, what is the growth rate that is worth considering?

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Sidi
Expert
replied on Jan 09, 2019
McKinsey Senior EM & BCG Consultant | Interviewer at McK & BCG for 7 years | Coached 300+ candidates secure MBB offers

Hi Anonymous,

this question can not be answered seriously in an isolated fashion. Growth rates alone are worth nothing and not the decisive factor on whether to enter a market or not. The only rigorous economic criterion for the entry decision is whether we expect to generate higher value than the investment costs required to enter the market. Market growth rate probably plays an important role in analyzing this value potential, but there are many more factors (market structure/competitive intensity, price projections, cost considerations (!), etc.

So stating such rules of thumb feels not really adequate for me.

Cheers, Sidi

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Vlad
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Content Creator
replied on Jan 09, 2019
McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School

Hi,

There is no industry lifecycle trend, except in tech. Most of the industries are established for the last hundreds years and their growth rate had been constantly changing. Most of the industries are constantly reinventing themselves or depend on external factors (E.g. oil&gas)

Product lifecycle is smth different and refers to a particular product. The range of growth rates there is huge so need to speak of the exact product

Best,

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Sidi gave the best answer

Sidi

McKinsey Senior EM & BCG Consultant | Interviewer at McK & BCG for 7 years | Coached 300+ candidates secure MBB offers
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