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Medium Market Entry

Highway To Hell

#Transportation
ProHub Comment

This case tests market entry strategy by combining geographic analysis, operational economics, and financial modeling. The candidate must synthesize qualitative factors (ease of doing business, political stability) with quantitative analysis (ROIC and payback period) to justify choosing greenfield investment over M&A despite higher upfront capital requirements.

Estimated Time 26 minutes
Difficulty Medium
Source Wharton
10 / 100
BuildCo, a leading Brazilian highway construction company is looking to expand internationally. Economic growth in Brazil has stalled, and in order to continue to grow both top-line revenues and bottom-line profitability, the client wants to diversify its portfolio and decrease its exposure to the Brazilian economy. What factors should the client consider as it thinks through its international expansion options?

Clarifying Information

  1. BuildCo operates only in Brazil, and have scoped opportunities in South America. Their staff speaks primarily Portuguese
  2. The client currently only focuses on building and operating public roadways
  3. BuildCo primarily wants to diversify its revenue. It has no specific goals on revenue or ROI
  4. The clients’ customers are always municipal, state, or national governments. They bid, usually through competitive RFPs
  5. While BuildCo wants to consider all geographies, they have a bias towards opportunities in South America
Mock Interview
Interviewer

BuildCo, a leading Brazilian highway construction company is looking to expand internationally. Economic growth in Brazil has stalled, and in order to continue to grow both top-line revenues and bottom-line profitability, the client wants to diversify its portfolio and decrease its exposure to the Brazilian economy. What factors should the client consider as it thinks through its international expansion options?

You

Thanks. Before analyzing, I'd like to clarify a few key questions...

Interviewer

Good question. Let me provide some background information...

You

Based on this, I suggest analyzing from these dimensions...

AI Score
Structure Analysis Communication Business Sense Quantitative
Practicing...
Score coming soon
Practice this case with AI Mock Interview

BuildCo seeks international expansion to reduce Brazilian exposure. After narrowing to four South American markets based on business environment and pipeline strength, the case requires comparing greenfield investment versus acquisition, ultimately recommending greenfield entry due to superior financial returns (14% ROIC vs 12%, 7-year vs 8-year payback).

Key Insights:

  1. Geospatial analysis combining infrastructure pipeline and ease of doing business can filter markets effectively
  2. Financial modeling should compare multiple metrics (ROIC, payback period, profitability) rather than relying on single indicator
  3. First-mover greenfield investments can outperform acquisitions despite higher capital requirements when M&A targets are overpriced relative to market fundamentals
  4. Government customers introduce political risk and timing uncertainty that must be factored into market entry timing and strategy