I was wondering if it's usually better to start a Market Entry Decision with an analysis of the current company in order to understand the capabilities and then deep dive into the market or if it's better to try to figure out the attractiveness of the industry, then look at threats and, finally analyze if the company has what it takes to mantain a competitive andvantage to remain a leader in the industry or to capture value from it and defend from possible competitive responses or future entrances
Market Entry Order
The first step is to make sure you're clear on why the company is looking to enter the market. Is it for topline growth, bottom-line growth, diversification, to gain economies of scale, to gain market share, build new skills/competencies, pre-emptively strike a foreign competitor, ahieve a long-term vision (applies well to an NGO) etc.?
Once you have this, you can get a feel for which of your 3-4 classic market entry buckets (company, market, competitor) you want to tackle first.
For example, if it's topline growth, the market size probably matters most. If it's economies of scale or building skills/competencies it's company first. If it's strike a foregin competitor or even bottom-line growth (for a comparison) it's competition first. I think you get the gist :)
Neither of the two! A case approach should always be a LOGIC, not a set of areas to scrutinize. So you have to start with setting up the criterion which needs to be fulfilled to answer the core question with "yes"! All the areas that you want to scrutinize (be it market, company, customer segments etc etc.) are just a consequence of that logic and are influencing different parts of your driver tree.
Please have a look at my previous anwers to similar questions - I have disaggregated the whole essence of setting up a structure in great detail.
Always start with clarifying an objective:
- What are we going to achieve on the market and what is the timeline?
- What are our business model and revenue streams now in the current market
- Are we going to enter organically or non-organically?
Then I would use the following structure:
- Growth rates
- Segments and growth rates
- Distribution channels
- Barriers (regulation)
- Market shares of competitors and their segments (see the next point)
- Concentration / fragmentation (A fragmented market with lots of small players is less mature and easier to enter from a scratch. Concentrated market is hard to enter but has potential acquisition targets)
- Unit economics of the players (Margins, relative cost position)
- Key capabilities of the players (e.g. suppliers, assets, IP, etc)
- Previous / projected entrants
Company (If the case says you have the company that operates in a different / adjacent market)
- Your current capabilities (e.g. suppliers, assets, IP, etc)
- Previous experience in entering the markets
- The need for investments
- Time to enter
- Branding (Do we keep an existing brand / do sub-brand if it is the new segment or create a new brand?)
- The existence of acquisition / licensing / JV targets if relevant
Related BootCamp article(s)
Approaching a Case
In order to get into consulting, the case study is the most important element of the interview. Here, you can learn the specific skills and concepts to solve them.
Investments or single business cases need to be evaluated based on a certain set of criteria. Since financial performance is the key criterion in most cases you need to have an idea about future financial impacts. A key tool to asses this impact is the cost-benefit analysis which is used to determine the net effect of potential revenues and costs.
Market Entry Strategy Frameworks may be a great solution to apply in your Case Interview if your client is searching for growth alternatives.
Get an overview over a company’s customers, competition, cost and capabilities by conducting a 4 C analysis in your case interviews
LubricantsCo, a very successful Asian premium producer of lubricants in their native region, would like to further increase their revenue and profit. The product range ranges from lubricants in the automotive sector (e.g. motor and gear oil) to industrial applications (e.g. fats, heavy-duty oils). ... Open whole case
LumCO, a company producing injection-molded components for lighting applications, has operated successfully in its native European market. The company wants to open up one production facility each in China and the United States and establish their own distribution network in both countries to serve ... Open whole case
Nutripremium is a very well-known premium nutrition food company in Europe (€1 billion revenue last year). It is based in Spain and has an excellent market share not only in its home country but also in Portugal, France, Italy and Germany. Nutripremium has two main lines of products: Vitamin-supp ... Open whole case
Beyer, one of the biggest pharmaceutical companies in the world, just invented a very reliable vaccine against Chickenpox, a disease that affects children in the age from 2 to 16 years. Beyer came to you wondering what their potential sales in Europe in the first year would be if they launched this ... Open whole case
Your client, Fysikum, is an operator of squash centres in Sweden. The squash centres include sauna, spa, pool, gym and of course the squash courts. Due to the extreme success in Sweden the company is considering expanding to other countries of Europe, in particular Germany. Therefore they asked us ... Open whole case