Market Entry Case Study

Market Research, Production Management, Strategy Planning, Budgeting
Case Study: Market Entry
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The Challenge
Two large state-owned enterprises (a food processor and an agrochemical company), wanted to assess the benefits of a strategic alliance. The food processing company was concerned about its vulnerability to a supplier oligopoly and was looking to mitigate input price and input quality risk by developing a mechanism to capture inputs at source. The agrochemical company wanted to grow revenue by developing a barter program with crop producers and an off-take agreement with the food processing company.
Project Methodology
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Market research
We identified a number of key players in the clients’ ecosystem, including farmers, transport companies, and commodity trading firms. We then conducted surveys, interviews and visits to identify potential local partners and develop several alternative potential market entry strategies.
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Data analytics
We also identified relevant internal and external sources of quantitative data, especially pertaining to input prices, production volumes, production locations, and transport costs, and then gathered and harmonised the data, enabling us to accurately value the cost and revenue components of the alternative market entry strategies.
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Strategy planning, forecasting, budgeting
Having accurately identified growth trends in crop supply, we derived realistic goals for the size of off-take agreements and so designed an appropriately sized logistics network. We developed business models for the four alternative market entry strategies, which included a detailed analysis of COGS build up, SG&A and CAPEX requirements.

We then estimated the NPV of cost savings versus the current procurement process, and conducted a sensitivity analysis to quantify factor sensitivity and determine strategy break-even points.
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Results

The client received an actionable strategic plan detailing a 5 year, $310 million progressive rollout, complete with an estimation of strategy NPV, sensitivity analysis and breakeven points.
The client was introduced to a number of key suppliers and potential acquisition targets in the local vertical.

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