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Bain Medium Market Entry Market Sizing Growth Strategy

Home Inspection Co

#Home Services #Real Estate
ProHub Comment

This case focuses on a classic market entry problem, requiring both quantitative market sizing and qualitative risk assessment. The recommendation is well-structured, providing a clear 'yes' to expansion and then detailing opportunities, risks, and next steps for the two considered states, allowing for a comparative analysis.

Estimated Time 15 minutes
Difficulty Medium
Source Wharton
50 / 100
Our Client, Home Inspection Co., is a third party independent home inspection company who conducts the inspections after a home is sold. They currently operate out of Ohio, and they have hired us to help them figure out if they should expand to more states, and if so, which state(s) and how?

Clarifying Information

  1. Have they looked at any states right now? Narrowed down to Colorado and Michigan
  2. How much revenue does Home Ins. Co do now? $10 million
  3. Any regulatory concerns? Typically gov’t run, but MI allowed 3rd party 10 years ago and CO was 2 ½ years ago
  4. How many states can they expand to right now? Only could expand to one
  5. What is their basis for wanting to move? Increasing top line revenue
  6. MI only allows 20% of their market to be inspected by 3rd party and Colorado is 50%.
  7. Is market size growing, shrinking,? Relatively flat
  8. What type of inspections do they do? Any house that are single family homes only
  9. Competition: the longer 3rd party has been allowed, the more competition so MI has many competitors, and CO has few competitors
  10. How many people and households are there? (answered on next slides)
  11. What is the price of inspection? Changes by state and type of home
  12. How often is a house inspected and how many homes are single family? Answered in next slides