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Former McKinsey Engagement Manager
Company X wants to know if they can profitably introduce their widget to the Chinese market.
Company Y wants to leverage its knowledge of the North American fast-food market to introduce a
new restaurant format. How should they do it and how long will it take to reach profitability?
Have you read case interview examples that sound like these?
Of course you have, because all successful businesses want to become more successful by expanding
into new markets, so there are many case interview questions on this topic.
Because of this, it’s important that you have a thorough understanding of the market entry case
framework.
Our Ultimate Guide to Case Interview Prep goes through everything you need to know about
consulting case interviews and how to pass them, so if you have general questions, that’s the best place
to turn.
If you’re asked a market entry case question, there’s a lot of information you’ll need to cover. You’ll be
better prepared if you practice this type of case.
A market entry case starts with a company deciding to enter a new market.
They could sell a new product into an existing market. Example: Netflix produces its own content
to air over its existing streaming service.
Or they could take an existing product to a new geography. Example: Starbucks enters the
Chinese market.
Whether a company is contemplating entering a new geography or a new product-space, the decision
is a big one. The CEO will face complicated questions like:
The high stakes and complexity of market entry decisions are the reason corporate executives facing
these decisions often turn to consultants for help.
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Assessing the market is step 1 because if the new market isn’t profitable (or won’t be profitable in the
future), there’s no point in going further with this case.
Does the client have the capabilities needed to make the new product or provide the new
service?
Do they have the technical skills?
Is their cost structure competitive?
Do they have the necessary sales or distribution channels?
Can they get whatever capabilities they currently lack?
Are there barriers to entering the market?
Does the client have an understanding of how to compete in the new geographic market?
Do they understand the customer segments in the new market?
Can they tailor the product or service to the requirements in the new market so they can
compete effectively?
What government regulations will be encountered?
Step 3: Analyze Client Resources Relative to the Investment Needs & Expected ROI
Questions to ask while analyzing the client’s resources relative to the cost of market entry and expected
ROI:
Step 4: IF Conditions for Market Entry Are Good, Then Determine the Best Strategy
to Use
You’ve decided the client in your case should enter the market.
Again, the decision of whether to enter the new market is only part of the answer. The company must
decide how to enter it.
For a new product or service, they should ask whether they should:
Create the capability to build the new product or provide the new service in-house?
Partner with someone already in the market?
Buy or license intellectual property?
Are there barriers to entry in the market? Intellectual property? Regulatory approval?
Can the company overcome these barriers on their own or will they need to partner to do so?
How important is timing? Is there an advantage to early market entrants? How fast do they need
to have a product in the market to win?
Will partnering allow the company to enter significantly faster than building capacity in-house?
How did the company enter the market to achieve this success?
When KFC first entered the China market, the success of southern-style American fried chicken in the
China market was no guarantee.
The restaurant needed to transfer its successful North-American business model to the new market.
But it also needed to take into account different consumer tastes, find promotional advertising that
would appeal to the Chinese consumer, deal with regulations that required that Western companies to
partner with Chinese-owned companies in order to enter the market, and more.
Let’s look through the KFC China example using the market entry framework.
Yum! Brands first entered the China market in 1987. At that time, the China market was growing
quickly. The country’s middle class was expanding and was receptive to western brands.
The Chinese restaurant market was dominated by a large number of street vendors and small, family-
owned, single-location restaurants.
In comparison, growth in the North American market was slowing and there was a high level of
competition from McDonald’s, Burger King, Wendy’s, Domino’s Pizza, and other restaurants.
The Chinese market provided an opportunity to enter a market without well-entrenched national
chains of fast-food restaurants and capitalize on the market’s growth.
KFC was positioned as the second-largest fast-food chain in the U.S. by number of stores. It had a
winning formula of providing high-quality food at a competitive price and marketing it well.
The challenge facing KFC can be seen by the fact that when they first entered the market, their
popular slogan “finger lickin’ good” was mistranslated as “eat your fingers off.”
Gaining insight into the Chinese consumer was a critical hurdle to success in this market.
At that time, western companies had little experience with dealing in the Chinese communist
government. But because the government required western companies to enter the market through
joint ventures with Chinese-owned companies, KFC knew they would find help with these decisions by
finding the right partner.
Step 3: Analyze Client Resources Relative to the Investment Needs & Expected ROI
KFC considered entering the China market to be an important strategic investment to maintain its
revenue and store growth despite high levels of competition in the North American market.
Their success in North American meant they could allocate substantial funds to the market entry in
China despite the fact that it would take years for their investment to pay off.
Step 4: IF Conditions for Market Entry Are Good, Then Determine the Best Strategy
to Use
As mentioned above, KFC was required to partner with a Chinese-owned company. They found a
partner that had strong connections with the Communist government to ensure that they would be
Their partner also helped KFC to identify its target market as the middle-class consumer who was
interested in western culture. Their sit-down restaurants had a reputation for cleanliness which helped
to set KFC apart.
In the early days, KFC restaurants also leveraged the fact that they were a unique and exciting
experience, a view into American culture.
KFC China’s menu includes many items an American customer would not be familiar with, such as
lotus roots, congee, and soy sauce wings.
The restaurant had a 40-page menu because of the Chinese consumer’s preference for variety.
Their promotion was tailored to focus on elements that the local culture valued, such as respect, love,
and support for the elderly.
The chain’s success in China depends not only on the taste of its food and its advertising, but also on
the speed and convenience of its service. These attributes were as important to winning in the China
market as tasty chicken.
Yum China has been so successful that it has been spun off from YUM! Brands as separately listed stock
on the New York Stock Exchange.
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1. Look for market entry cases buried inside other types of case study
interviews.
If a company is looking for growth, market entry is one way they might achieve it, so your revenue
growth case could turn into a new product or new geographic market case.
2. Ask your interviewer questions and take good notes on their answers.
Market entry cases require a lot of data–market growth, cost of entry, client capabilities. You’re likely to
miss important information if you try to solve the case just through brainstorming and your own
knowledge of the industry. Don’t be afraid to ask questions.
Look at all 4 elements of the market entry framework. Entering an attractive market without the right
capabilities will lead to substantial losses and a CEO being fired.
4. Identify alternative market entry strategies and evaluate one relative to another.
For example, compare the advantages of a greenfield operation (full control over the business model
and quality) versus partnering with a company with a presence in the local market (knowledge of the
local consumer, speed). The comparison of one entry strategy to another can make the best choice
clear quickly.
This McKinsey article: Beating the Odds in Market Entry is a great resource for those who want to dig
deeper on this subject.
If you have more questions about market entry, leave them in the comments below. One of My
Consulting Offer’s case coaches will answer them.
Other people prepping for consulting case interviews found the following pages helpful:
Thanks for turning to My Consulting Offer for advice on the market entry framework. My
Consulting Offer has helped almost 85% of the people we’ve worked with get a job in
management consulting. We want you to be successful in your consulting interviews too. For
example, here is how Emma was able to get her offer from Bain.
Nail the case & fit interview with strategies from former MBB Interviewers that have helped 85%
of our clients pass the case interview.
Your Name *
Your Email *
Undergraduate Student
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