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Key drivers of market growth

Anonymous A asked on Aug 02, 2018

Hi guys,

what are the key drivers of market growth?

I was asked this question in a competitive response case yesterday, it's about should the client (a monopoly company) worry about the upcoming liberalization that local/international competitors are entering the market?

it's gas industry.

(edited)

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Sidi
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updated his answer on Aug 02, 2018
McKinsey Engagement Manager & BCG Consultant | Interviewer at McK & BCG for 7 years | Coached 90+ candidates secure MBB offers
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Hi Anonymous! As always, just use pure logic to disaggragate the ACTUAL question!

"What are key drivers of market growth?"

1. Market growth is defined as the yearly percentage change in total market size (revenues)

2. Revenues can be disaggragated into Volume and Price

3. Volume growth is driven by changes in market demand (number of customers, average demand per customer) and market supply (production capacity, logistics capacity, etc.)

4. These elements can be further disaggregated into drivers (e.g., expected growth in number of customers can be driven by demographics, macro trends, shifts in preferences, etc.)

You can (and should) outline this logic by means of a logic tree. As any case question, mastering first principles of problem structuring will allow you to come up with the answer to this specific question.

Cheers, Sidi

(edited)

Vlad replied on Aug 02, 2018
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Hi,

The question is still very unclear. But I would focus on the following:

  1. Supply capabilities (i.e. gas extraction) and quality
  2. Economies of scale (Opportunity to compete on price)
  3. Long-term contracts with wholesale buyers
  4. Own network of gas stations
  5. Brand
  6. Other capabilities

Best

Benjamin replied on Aug 02, 2018
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Hi,

As usual, we need background about the industry at least to help you.
Best

Benjamin

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