Market Entry Structure

market entry
New answer on Jun 23, 2022
5 Answers
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Anonymous A asked on Oct 28, 2021

Hi all,

In market entry structures, do you advise doing a rough financial analysis first within “should they enter the market” followed by the analysis of entry strategies? Or do you advise looking at entry strategies first followed by a financial analysis of each entry mode? I am bit confused as I tend to look at “should we enter first”  (inc. a financial analysis) then how should we enter (evaluation of strategies). 

Would you also recommend clarifying with the interviewer if the client has any particularly preferred mode of entry? Or should I just keep it under the “how should we enter” part?

(edited)

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Pedro
Expert
replied on Oct 28, 2021
Bain | EY-Parthenon | Roland Berger | FIT | Market Sizing | Former Head Recruiter

The clarifying question should be slightly different. It should be whether they have a specific mode of entry (and if so, which one) or if they open to alternatives. 

If it is the first case, then in your structure you evaluate the financials of that specific entry-mode. If it is the later, then you evaluate overall market attractiveness and high level financials.

Regarding the approach, you have to be pragmatical: 80-20% rule. You always focus on the most efficient way to make a decision. So you don't evaluate specific entry options before confirming that you want to enter the market. 

So what you need to know initially is if you expect to turn a profit / reach certain revenue  (whatever the goal is). There are three potential answers to this first question (should you enter):

  1. You expect to turn a profit, regardless of the entry mode
  2. You do not expect to turn a profit, regardless of the entry mode.
  3. Turning a profit… depends on the specific entry mode you chose. Only in this last case you need to evaluate the specific entry mode to answer the first question.

Hope this helps,

Pedro

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Clara
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Content Creator
replied on Jun 23, 2022
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut
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Ian
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Content Creator
replied on Oct 29, 2021
MBB | 100% personal interview success rate (8/8) and 95% candidate success rate | Personalized interview prep

Hi there,

It completely depends on the case!

There is no one-size-fits-all and there is not just one market entry type of question - there are many!

They may ask “should we enter” or “how should we enter” or “which market should we enter”, etc. etc.

Ultimately, you need to clarify the objective and the client's goals/needs before you create the framework.

For a “classic” market entry (should we enter), you need to create a structure along the lines of:

  1. Is the market attractive
  2. Is the market attractive for us (will we win?)
  3. If so, can we enter/how and is there a good ROI

Make sense?

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Hagen
Expert
replied on Oct 28, 2021
Current Bain & Company Project Leader and interviewer | 250+ interviews conducted | 6+ years of coaching and mentoring

Hi there,

This is indeed an interesting question which is probably relevant for quite a lot of users, so I am happy to provide my perspective on it:

  • Generally speaking, I would advise you to approach market entry questions in the form of a funnel, i.e. you should first make sure that the market is attractive at all and that the company has the internal capabilities to succeed in the market before doing the economic assessment and having a look at risks and mitigation.
  • Solely if the market entry is still a valid option, you would then go about doing the economic assessment where the entry mode will come into play. At best, either with the clarifying questions or at the beginning of this section, you have already clarified on the preferred/ possible entry mode.

In case you want a more detailed discussion on how to approach any type of case study, please feel free to contact me directly.

I hope this helps,

Hagen

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Sidi
Expert
replied on Oct 28, 2021
McKinsey Senior EM & BCG Consultant | Interviewer at McK & BCG for 7 years | Coached 350+ candidates secure MBB offers

Hi!

One of the main points tested during case interviews is the candidate's ability to be efficient in his/her approach. 

Of course the entry mode might influence the financials. Nevertheless, it is much more efficient to get a quick understanding of whether entering the market harbors enough value potential to outweigh the corresponding investments or not. If it is the case, then we already know that it makes sense in principle and, hence, have already answered part 1 of the questions in a much more time efficient manner than if we would boil the ocean and repeat the analysis for every possible mode of entry. This ability to identify the most important bits of analysis quickly and getting a high level undertanding of what the answer will be is a core quality that MBB are looking for.

Cheers, Sidi

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Pedro gave the best answer

Pedro

Bain | EY-Parthenon | Roland Berger | FIT | Market Sizing | Former Head Recruiter
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