Case 28:
Market Entry BCG Round 2
Our client is a start-up with the ability to deliver broadband internet to commercial airlines. How
Prompt would you help them think about their offering?!
About the case: This is a market entry case where candidate are required to evaluate the feasibility
of a new product in conjunction with the airline industry. The candidate should use a comprehensive
framework, walk the interviewer through it and be prepared for analytical detours throughout the flow
of the case.
The calculations represented here are only one approach and interviewees may take other
approaches, depending on the assumptions made. The interviewer should be mindful of this and
allow for flexibility.
Industry & Market Size Discussion: The interviewee should have mentioned this as a major bucket
in his/her framework.
Use the information below to provide guidance as necessary.
Guidance
Broadband for the airlines
There is general interest in broadband internet from the airline industry. The start up would have to
invest relatively little up front and would keep most of the revenues. They would charge the
customers on a per flight pricing model.
Size of the Market
Ask the candidate to estimate the market size and hand over Exhibit 1. Inform the candidate that
there are 3,000 planes. Full answer in chart belo.!
Pricing
In order to finish the market size, the candidate should ask for the price per
flight. Hand out Exhibit 2 and ask candidate to set the price.
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Case 28:
Market Entry BCG Round 2
Class First Coach
Seats/Plane 20 180
Load Factor .75 .75
Full seats/plane 15 135
Analysis Biz Travelers 100% 30%
Laptop users/plane 15 40.5
Total laptop users/plane 55.5
3000 planes x 2000 legs/plane x ~50 laptop users/plane = 300,000,000 approximate annual
potential user-legs.
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Case 28:
Market Entry BCG Round 2
Assume 100 passengers (for ease) at the various price/penetration combinations.
30 users at $5=$150/flight
25 users at $10=$250/flight
Analysis 20 users at $15=$300/flight
10 users at $20=$200/flight
5 users at $25=$125/flight
Set price at $15."
Breakeven Analysis
Given the information already revealed in the case and the information below the candidate should
calculate a break-even point.
Guidance
Information to be given if asked:
The company has discovered that if they can generate $250,000 per plane in annual
revenue, they will be profitable installing the technology on that plane.
250,000/2,000 legs/plane = $125/leg
$125/$15 about 8 users/leg
Analysis
Response: Yes, they should break even.
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Case 28:
Market Entry BCG Round 2
Other factors
Guidance Probe the candidate for breadth and understanding of new market entry. Ask him/her about the
following aspects of this project.
Competition
The interviewer should probe deeper into the competition especially with regard to Intellectual
Property. For this case, the company has the patent on the high speed connection.
Analysis What about low-speed internet connections?
Risks
Ask the candidate which risks are associated with the business model. Use your
judgment when considering their answers.
Candidate should provide a crisp recommendation A crisp recommendation should be roughly 30 -
45 seconds long and should include clear bullet points that support an overall recommendation. For
Expected: Accurate arithmetic with solid profitability and breakeven calculations.
Performance
Evaluation Good: Candidate provides a framework that includes exploration of all possible options and offers a
clear recommendation that summarizes key findings in under 30 seconds.
Excellent: Candidate considered sufficient number of other factors while maintaining poise through
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Case 28: Connections
Market Entry BCG Round 2
Exhibit 1
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Case 28:
Market Entry BCG Round 2
Exhibit 2
136
