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Question about calculating the growth element of the matrix

Bain case: Asian lubricants producer
New answer on Aug 04, 2020
1 Answer
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Kevin asked on Jul 30, 2020

The prompt says "

  • Russia and notably Turkey are countries with a relative high market growth compared to Germany.
  • This information can be used to estimate the market growth of car oils, since more motor oil will be used in growing economies in the future."

What does it mean by this can be used to estimate the market growth of car oils? Is it implied the interviewee does some calculations based on assumptions? The only way I could think of to derive it from the given information was that we know that Germany is least growing, so we are left with Rus and Turkey. We are then told Germany and Russia have high competition - which would lead you to believe the market is more established in Russia, and thus Turkey offers best prospects for market growth. However this would seemingly contradict data that car density is higher in Turkey and Russia has a higher proportion of old cars (potential for newer cars w/ rising incomes?). What is best way to derive the Growth segment of the prioritization table in this instance? Thanks for any help.

(edited)

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Ian
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replied on Aug 04, 2020
#1 BCG coach | MBB | Tier 2 | Digital, Tech, Platinion | 100% personal success rate (8/8) | 95% candidate success rate

Hi Kevin,

Good question and a great example of having to use limited information to come up with hypotheses.

Car usage is a direct proxy for economic growth (and, by definition, vice-versa). In fact, when analysts were trying to figure out how quickly China's economy was rebounding from Covid-19 impacts, they primarily looked at 1) Pollution and 2) Traffic (road, pedestrian, etc.).

We can often, almost inronically, see how well a city is doing economically just by seeing how bad its traffic is!

So, given that we know Russia + Turkey are growing, we can assume that the amount of cars on the roads would also grow at the same rate (both more people with cars and more people driving).

More cars on the roads = more cars that need to be built + maintained = more motor oil/lubricant

And yes, this means these markets are more attractive for an oil lubricant manufacturer. This is just a takeaway (an important one to narrow the case). No need to calculate anything from this.

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