A market entry case asks whether a client should enter a new market and how they should do it. This page is a set of four practice prompts with worked solutions, each built to test a different failure point: sizing the wrong thing, ignoring the competitive response, assuming capability, and choosing an entry route without pricing it.
Work each prompt yourself before reading the solution. Give yourself twenty-five minutes, write the structure down, and do the arithmetic on paper. A solution read cold builds recognition; a solution read after an attempt builds reasoning, and only one of those transfers to an interview.
For the underlying method — how to build the structure, what to ask, how to sequence the analysis — see the market entry case study guide. The figures in every case below are fictional and constructed for practice.
Case 1: The profit pool, not the market
Prompt. Our client is a European household appliance manufacturer considering entry into the Canadian small-appliance market — kettles, toasters, blenders. They want to know whether the opportunity justifies the investment. Annual Canadian retail sales in the category are approximately $1.2 billion and growing at 3 per cent a year. Should they enter?
Work it before reading on.
Solution
The trap is the $1.2 billion. It is retail sales, it belongs to the whole market, and the client would capture neither all of it nor the retail margin within it. Three adjustments are needed before the number means anything.
Retail to manufacturer. Retailers in this category typically take a substantial share of the retail price. Assume the manufacturer’s selling price is around 55 per cent of retail. The manufacturer-level market is therefore roughly $1.2bn × 0.55 = $660 million.
Total market to addressable. The client makes mid-to-premium appliances. If the premium and mid tiers are, say, 40 per cent of the category by value, the addressable market is $660m × 0.4 = $264 million.
Addressable to achievable share. A new entrant with no distribution relationships and no brand recognition in Canada does not take 20 per cent. A realistic ambition after three years, against established incumbents, might be 5 to 8 per cent. Take 6 per cent: $16 million of annual revenue.
Then apply margin. At a 12 per cent operating margin — reasonable for a manufacturer in a competitive durable-goods category — that is roughly $1.9 million of annual operating profit.
So the question is not whether to chase $1.2 billion. It is whether $1.9 million a year, arriving in year three, justifies the entry investment. If entry requires $10 million in setup, tooling and marketing, payback runs beyond five years, which for a category growing at 3 per cent is a hard case to make.
Recommendation. Do not enter directly on these assumptions. The chain of estimates is what the recommendation rests on, so name the sensitivity: achievable share is the assumption doing the most work, and it is the one worth spending research money on before deciding. If the client can reach 12 per cent rather than 6 — through an exclusive retail relationship, for instance — the case reverses.
What this case tests. Whether you narrow from market to profit pool before evaluating. Candidates who compute an attractive-sounding market size and stop have answered a question nobody asked.
Case 2: The competitor who responds
Prompt. A regional coffee chain with 40 outlets in one province is considering entering a neighbouring province where a single incumbent holds roughly 60 per cent of the branded café market. Our client’s unit economics are strong at home. Should they enter?
Solution
The structural feature here is a concentrated market with a dominant incumbent, which means the incumbent’s response is part of the analysis rather than an afterthought.
Ask first: why does the incumbent hold 60 per cent? A dominant share can come from genuine advantage — better sites, lower supply costs, a brand people prefer — or from the absence of a serious challenger. These lead to opposite recommendations, and it is a clarifying question, not something to assume.
Then model the response. If the client opens 10 outlets and the incumbent responds with local price cuts around them, the client’s economics change in the market where they have least scale and the incumbent has most. The incumbent can subsidise 10 contested locations out of, say, 90 unaffected ones. The client cannot.
Work the arithmetic:
- Assume a target of 10 outlets, each at $900,000 revenue a year and a 15 per cent store margin: $1.35 million of store profit at plan.
- A sustained 10 per cent price reduction to match the incumbent, with no volume gain, takes roughly 10 per cent off revenue and nearly all of it off margin — store margin falls to about 5.5 per cent, or $495,000.
- Against a build cost of perhaps $400,000 per outlet, or $4 million, payback moves from roughly three years to over eight.
Recommendation. Entry is defensible only under conditions that limit the incumbent’s ability or willingness to respond. Two are worth testing: entering a segment or format the incumbent does not serve, where matching would damage its core; or entering in a geography where its density is low and the response would be locally expensive. A head-on entry into the incumbent’s strongest cities on price is the version to advise against.
What this case tests. Whether you treat the market as static. Candidates routinely model their own entry and forget that the incumbent gets a move.
Case 3: Capability, not opportunity
Prompt. A national grocery retailer with strong margins wants to enter online grocery delivery in its home market. The market is growing at over 20 per cent a year. They ask whether they should build it.
Solution
An attractive market that the client cannot serve profitably is not an opportunity, and this case is built to test whether the candidate checks.
The structural question is what online grocery actually requires that a store network does not provide: picking labour, a delivery fleet or contracted equivalent, routing and slot software, cold chain in transit, and returns handling. Each is a capability, and each has an economics.
Work the unit economics rather than the market growth. A typical online grocery order in this construction:
| Item | Per order |
|---|---|
| Basket value | $120 |
| Gross margin at 25% | $30 |
| Picking labour (30 min at $20/hr) | ($10) |
| Delivery (shared van, 4 drops/hr, $32/hr all-in) | ($8) |
| Packaging and cold chain | ($2) |
| Delivery fee charged to customer | $6 |
| Contribution per order | $16 |
That is positive, which surprises candidates who expect online grocery to lose money per order. But it is contribution before any of the fixed cost: software, the fleet, the picking infrastructure, and the marketing to acquire the customer.
If acquisition costs $40 per customer and the average customer places 15 orders before churning, lifetime contribution is $240 against $40 of acquisition — workable. If they place 4 orders, it is $64 against $40, and the fixed cost is never covered.
Recommendation. The decision turns on retention, not on market growth. Recommend a limited pilot in two or three high-density urban areas — where drops per hour are highest and the economics most favourable — with a defined retention threshold that determines whether to scale. Density is the second sensitivity: at 2 drops per hour rather than 4, delivery cost doubles and contribution halves.
What this case tests. Whether market growth pulls you past the client’s ability to serve it, and whether you can build a unit economic from components rather than asking for one.
Case 4: Choosing the entry route
Prompt. A mid-sized industrial equipment maker has decided to enter a new national market. Local relationships matter — buyers are conservative and service coverage is a purchase criterion. They ask how to enter: build a subsidiary, acquire a local distributor, or partner with one.
Solution
The decision has been made; the question is route. Compare on the dimensions the client’s situation makes decisive rather than on generic pros and cons.
| Route | Speed | Capital | Control | Main risk | Fit with this client |
|---|---|---|---|---|---|
| Build | Slow — 2 to 3 years to relationships | Moderate, spread | Full | Time to reach scale while carrying cost | Weak: relationships are the barrier and building them is exactly what takes years |
| Acquire | Fast — relationships transfer with the business | High and upfront | Full after integration | Overpaying; losing the salespeople who hold the relationships | Strong on speed, but the asset being bought is people |
| Partner | Fastest | Low | Limited | Margin sharing; no direct customer relationship | Good as a test, poor as an end state |
The insight to reach is that in a relationship-driven market, the acquisition risk is specific: the client would be buying a distributor whose value is its salesforce and its customer relationships, both of which can leave. That reframes the diligence question from “what are the assets worth” to “what retains the twelve people who matter”.
Recommendation. Partner first with a defined term, to test demand and learn the market’s purchasing behaviour at low capital risk, with a negotiated option to acquire the partner. This sequences the decision: it buys information before it commits capital, and it converts the acquisition from a bet into a decision made with two years of data.
Name the cost honestly — partnering sacrifices margin and delays direct customer relationships, and if the partner performs well the acquisition price rises. That trade-off is the answer, not a caveat to it.
What this case tests. Whether you can compare routes against this client’s specific barrier rather than reciting the generic advantages of each.
Working through these
Four habits separate strong answers from complete ones, and all four are visible in the solutions above.
Narrow from market to profit pool before evaluating attractiveness. Give the competitor a move. Test capability against the unit economics, not against a description of the client’s strengths. Price the alternatives to entering, including entering later — a recommendation to wait, with the trigger that would change it, is a legitimate answer.
Then name the assumption the recommendation is most sensitive to, before you are asked. In case 1 it was achievable share; in case 3 it was retention. Interviewers ask this question in almost every entry case, and answering it unprompted is one of the clearest signals available.
More worked cases across ten other formats are in the case study library, the arithmetic behind them is covered in case maths techniques, and market sizing covers the estimation these cases open with. For a full preparation sequence, see the case interview hub.
