I find it weird that expansion of market is not considered

Question

It says in the analysis of the case that Poker Inc would simply get existing customers in KV if they open a casino there as a response to a new entrant. Which means, instead of losing $113m they would retain those customers. However, wouldn't it be possible that opening a second casino in KV increases the customer base somehow? In which case Poker Inc would have an extra opportunity for revenue (not just the $113 that is retained)

Answer 1

Hello!

Not only that, but also cross-sell and up-sell opportunities

Hope it helps!

Cheers,

Clara

Answer 2

Hello Radhia,

your point is fair and it would be fine to discuss it with the interviewer. The main hypothesis should be that you can gain some gamblers that are usually going in other casinos in Royal City.
Yet, the hypothesis of the proposed solution is that, since both you and competitors will have a casino in KV, you will both have the same market share of today. This results in no change of the revenues.

Does it make sense?

Luca

Answer 3

Hi! I agree, your logic works – opening a second casino may definitely lead to an increase of the customer base, so it's an additional opportunity.

Answer 4

Hi radhi, I agree with you, it deserves a deep dive and you can totally propose it to the interviewer

Best,
Antonello