Case Compendium for Consulting Interview Question - Market Entry Strategy for OEM Company

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Case in Point: Complete Case Interview Preparation - Market Entry Interview Question

Market Entry for OEM Company

Interviewer: Our client is a known OEM like Ford Motors. It has a presence across the globe in countries such as North America, Southeast Asia, and Europe. It wants to expand to other markets and is considering India.  

Please help me decide whether they should enter the Indian market or not. 


Priyanka:  I would like to understand our client better. Since our client is an OEM like Ford, I am assuming that they produce various components like the engine and chassis of the automobile which are integrated into their vehicles. Since they manufacture the components themselves, they are able to maintain quality. 

Interviewer: Yes, that sounds right. 

 

Priyanka: I would like to understand what the goal of the client is when they are planning to expand to India. 
Interviewer: The client wants to gain market share and then become profitable in 3-4 years. 
 
Priyanka: Does our client have competency in any segment of the automobile – Economy, Premium, or Luxury? 

Interviewer: Our client has competency in both the Economy & Premium segments. You can decide which one you want should launch in India. 

 

Priyanka: Who are the existing competitors for our client in India? 

Interviewer: There are several players in the Indian market but some of the big ones are Maruti, Tata, Mahindra, Hyundai etc. Maruti has the largest market share almost 50% followed by Tata & Mahindra and then Hyundai. 

 

Market Attractiveness 

 

Priyanka: Ok I would start by evaluating the market sizing and see if the market is attractive enough or not. 

Interviewer: Ok I don't need the numbers here you can just help me with the approach. 

 

Priyanka: I will take India’s population and assume the average household size to be 4. I will remove the rural segment as they will not be willing to buy automobiles due to the unavailability of proper road infrastructure.  

I will look at the urban segment and divide it further into low, medium and high income. Again, the low-income bracket will not be able to afford such automobiles. We will look at medium and high-income groups as our primary segment.  

I will assume average car ownership per household for medium and high-income groups separately. 

Since there are already existing players in the market, I will assume that for our client who is a new entrant, a reasonable initial market share might be around 1-2%. If we know of any competitors who are offering the same value proposition, we can assume that our client will also be able to capture close to that market share in a few years. 

We will also consider the average replacement cycle for our automobile to be 7-8 years. 

Interviewer: This sounds right. 

 

External Analysis 

 

Priyanka: The market size looks quite attractive. Now, I will analyze the external conditions and access whether our client should enter the Indian market on not. 

Interviewer: Please go ahead. 
 

Priyanka:  

External environment: The Indian government has opened its markets for FDI and is offering several benefits to companies that want to establish their manufacturing units in India. Our client can also leverage this opportunity. 

 

Strategic Partnerships: Our client can form alliances with local partners, distributors, and dealerships to navigate the Indian market effectively. 

 

Availability of cheap labor: Our client can also use the cheap labor workforce advantage and establish production facilities and serve the Indian markets. 

 

Interviewer: Ok our client is unable to decide if they should introduce the economy segment or the premium segment, what do you think? 

 

Priyanka: India is one of the fastest-growing economies in the world. Along with that, the middle-class population is increasing and so is the disposable income of Indians. Given that the economy segment is already concentrated, I think our client can focus on the premium segment. 

 

While the Indian automotive sector is competitive, the premium segment is still less tapped, and our client will be able to establish a unique market position. 

 

Interviewer: Thanks, we can end here. 

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