Business School Strategy Question
October 5, 2012
Since most readers are all studying hard to get into business school, I thought that today I would throw a strategy question out there for discussion. Read through the following situation and post your thoughts in the comments. I will let a few days go by to gather ideas, and then I’ll chime in.
You are the CEO of a trucking company, and you are thinking about entering a new market. You will only invest the resources to enter one of the two markets that are available to you. You need to decide which market is most attractive.
In the first market, another trucking company is already serving customers. This company has invested $100 million in their operations and their cost to serve the customer is $.003 per mile.
In the second market, a train company is already in operation and serving customers. This company has also invested $100 million in their operations and is able to serve the customer at a cost of $.003 per mile.
Which market do you enter and why? For this example, assume that the quality and convenience of both services from the customer perspective is absolutely equal.