Market Entry of Chinese Auto OEM into USA - What to consider to answer question to build a plant or not?

automotive case questions market entry Plant
New answer on May 14, 2022
3 Answers
Anonymous A asked on May 11, 2022


after developing the framework for US market entry  of a Chinese automotive OEM, the question was if the OEM should consider to build a plant in the US or not? What are the key areas to consider?

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Content Creator
updated an answer on May 12, 2022
MBB | 100% personal interview success rate (8/8) and 95% candidate success rate | Personalized interview prep

Hi there,

Is this a framework question or a case question?

There are a few ways to look at this, and each one depends on the context of the case/question (I have a number of clarifying questions I'd have to ask to determine which of the below work):

  1. Benefit vs. Cost Analysis
  2. Compare upfront investment to NPV of cost reduction and revenue uplift (if any) minus recurring costs
  3. Compare US plant to other options (upgrade/improve existing plan, outsource/pay for production in US, partner, build a plant elsewhere)
  4. Determine current need (i.e. why we would build) and if building plant actually addressed that need in a cost-effective way
  5. Possibly a “framework” approach of 1) Assessing what other competitors have done 2) Looking at ourselves (client/plant/financials) and 3) Implementation considerations
  6. Anya's approach works if the case question is essentially asking “should we enter the US OEM market”…it's not clear that this is the question (I don't know, as you haven't provided appropriate context)


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Anya updated an answer on May 11, 2022

1) market attractiveness of auto OEM in the USA 

- average profit margins 

- growth rates 

- market size 

- regulation 

- new technologies


2) competitive landscape in the USA 

- concentrated or fragmented market?

- respective market share of competitors 

- any differentiation or competitive advantage 


3) capabilities of the chinese auto OEM

- human capital: expertise, skills, talent 

- physical capital: facilities, machinery, operational processes implemented 

- financial capital: financing required to enter this market and to build the plant 


4) financial considerations 

- expected costs 

- expected revenues 

- expected profits 

- breakeven / payback period 

- expected ROI 


to structure the framework even more you can even divide it into 

EXTERNAL and include: market attractiveness and competitive landscape 

INTERNAL and include: capabilities and financial considerations 




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Content Creator
replied on May 14, 2022
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut


In these cases, why don´t you give it a shot and then post here to get the community´s feedback? I assure you, you will learn so much more in doing that and it will get you ready for the real interview



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Ian gave the best answer


Content Creator
MBB | 100% personal interview success rate (8/8) and 95% candidate success rate | Personalized interview prep
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