Market entry framework: the two questions that decide

The market entry framework is a list of questions sorted into three blocks: the attractiveness of the market (size, growth, profitability, competition), the company's ability to win there (transferable advantage, resources, investment and expected return) and the entry mode (alone, through an acquisition or with a partner).

It has no named author. It is a textbook synthesis of several older tools, including Porter's five forces for attractiveness and the 3Cs for the customer, competitor, company triangle.

It fits cases such as "our client, the leader in France, is considering entering Germany" or "should we launch this new category?". The logic fits in one sentence: an attractive market where you have no advantage is worth nothing to you, and neither is a market where you are very good but that pays nothing.

The tree reads as a chain of conditions. The first two branches are filters: if one is negative, the third no longer matters. The third is not an execution detail, because the entry mode changes the numbers of the first two. Buying a local player gives you market share and a network right away, at a price that weighs on the return.

Here is the prompt. Veloce builds electric cargo bikes and sells them online, direct to consumers, in France. Its CEO wants to know whether to enter Germany. The interviewer gives the following numbers as you ask: 200,000 cargo bikes are sold there each year at €5,000 on average, the market grows 10% a year, and three German brands hold 60% of it.

Is the market worth it? 200,000 bikes at €5,000 make a one-billion-euro market, growing, with 40% of volume outside the three leaders. The answer is yes, and you do not linger.

What can Veloce aim for? The CEO targets 3% of the market in three years, which is 6,000 bikes and €30M in revenue. With a 20% margin on each bike after variable costs, that is €6M a year.

What does it cost? The prompt puts entry at €12M, between marketing and building a network. At full run rate, the investment pays back in two years. On paper, the case is closed.

Can we actually win there? This is where the case is decided, and the information only comes if you ask for it: how do Germans buy a cargo bike? The interviewer answers that 80% of sales go through dealers, after a test ride in store. Veloce has no dealers and its model relies on online sales. The 3% assumption only holds if Veloce gets into the shops.

Recommendation. Yes to Germany, but not with the French model. Veloce should enter with a partner, a dealer chain for instance, and start with two large cities to check that a bike displayed in store sells at the expected pace. The main risk is the margin given up to the dealer, which could bring the 20% much lower: that is the first number to negotiate.

The framework breaks first because it puts everything on the same level. In the Veloce case, nine sub-questions out of ten are settled quickly and a single one, access to distribution, decides everything. A candidate who goes through the blocks in order spends four minutes on market size, which the prompt almost gave away, and reaches the real issue when time is running out.

It also breaks because "attractive" means nothing in absolute terms. A one-billion market is huge for a small company and negligible for a group fifty times that size. Attractiveness is judged against the client's objective, which you should have clarified before structuring: are they after growth, diversification, a response to a competitor?

Third weakness, it treats the decision as a yes or a no. Good recommendations are almost always conditional: yes if we find a partner, yes starting with a pilot, no until the margin is secured.

Finally, it forgets what entering costs the rest of the company: management attention, cash that will not go elsewhere, the risk of cannibalising your own sales when the move is a new product rather than a new country.

Keep the two questions as a skeleton and fill them with what is specific to the case. Before laying out your structure, ask yourself what made the client successful at home: a brand, a price, a network, a technology. Your second branch then becomes "does this advantage transfer?", which is a precise question instead of a heading.

Then say where you think the case will be decided. "The market looks promising, I will check its size quickly and spend most of the time on our ability to sell without a local network." That is a leading hypothesis: it may be wrong, but it shows you are making a choice.

Put numbers on both sides, even rough ones: a revenue potential on one side, an investment on the other. If the prompt does not give the market size, you build it yourself, which is a full market sizing exercise.

Finish with a recommendation that includes a condition and a first step. In the FrameLab course, this kind of case is built by combining an issue tree for the decision and a driver tree for the numbers, not by reciting three blocks.

A French frozen food retailer, profitable and known for its own-brand products, is considering opening in Spain. In two minutes, write your structure and the first question you would ask the interviewer.