The Business Case #1: Entering a New Market

1. Whenever a company wants to enter a new market, the company needs to have a cogent reason to do so.  So the first responsibility as a consultant, is to clearly understand this reason.

2. Generally, entering a new market always comes down to increasing profits—as should the majority of business decisions.  Thus, if we expect this new market to equal more money for us, we need to do a good market analysis, to determine whether or not it is attractive.  In this market analysis we should be looking for:

• The size of the market
• The growth rate
• The stage of development
• Who the market serves (customers)
• Average margins

3. Then once we have determined the overall attractiveness of the market, we want to know whether or not the market is attractive to us.  This will involve a competitor analysis and an assessment of how this new venture will affect our current operations.  Look for the following:

• competitor analysis
  • list of competitors
  • their products
  • their market shares
• barriers to entry?
• barriers to exit?
• how do we price/differentiate our product?

4.  If we do decide to enter the market, then we have 3 choices as to how to enter the market:

• develop the business in house
• Acquisition
• Joint Venture

 

Summary

1. Why does the company want to enter this market
2. General Market Analysis
3. How this market makes sense to the company
4. How to enter the market