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Market Entry Aspects

Anonymous A

Hi all - during market entry cases I tend to basically look at the target market potential, our own ability to do business there, and the profitability/risks involved.

I have noticed that during some cases that makes perfect sense, and in others, it makes sense to also have a look at our current established market (and the rev/cost structure). I havent been able to figure the difference as to when do this, during the case openings.

Two questions wrt the above:

1. How do you generally recognize the need to investigate the current market?

2. If you always have to look at the status quo, how do you go usually include it in your approach?

Thank you all.

Achyut replied on August 15, 2016

If I understand your questions correctly, you are trying to figure out the difference between analyzing the overall market (or an industry), vs. the subsections of the market that a particular company is playing in. This kind of a dilemma happens most often in a market entry case. For e.g. - should a South African car manufacter (let's call it company X) enter the Indian market. For such a case, you usually have to answer the following questions:

Indian market:

  1. How big is the Indian car market? How fast is it growing?
  2. Which segments of the market are driving growth? (e.g. SUVs, electric vehicles, high-end cars)
  3. What is the competitive landscape? Who is playing where?

Company X:

  1. What kind of cars does X make? Is it big in any other businesses?
  2. What are the key strengths of X? Why is it doing well? (e.g. superior brand, engine quality)

India entry strategy:

  1. What are X's primary objectives of entering the Indian market? (e.g. profitability, market share)
  2. Is there a match between X's strengths and the most attractive segments of the Indian market? (i.e. does X play or is strong in the same things
  3. Are there any other benefits of entering the Indian market? For example, is there an existing relationship with an Indian supplier that would give X economies of scale?
  4. Are the government regulations favourable? Can X easily find suppliers and serve customers (establish distribution channels, provide after sales service etc.)?

If you answer these questions, you will get a much clearer idea of the company's current market positioning as well as the structure of a target market.

Not a direct answer but I hope both your questions were addressed!

Anonymous A replied on August 15, 2016

Great answer, thank you, helps a lot!

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