Prioritizing Investments

The reality is that most businesses don’t have limitless resources, so the most successful businesses are often those with a clear mission.

When determining where to invest and which campaigns to pursue, it's essential to establish how appealing an opportunity is, and your potential to succeed in that market.

Opportunity Appeal

When it comes to determining the attractiveness of an opportunity, McKinsey suggests seven key factors to consider:

Market Size: Gauge the breadth and depth of the market you're considering. A larger market provides more room for growth and expansion, offering greater opportunities for success.
Market Growth: Evaluate the trajectory of market growth to anticipate future demand. Investing in a market with strong growth potential positions you for long-term success and sustainability.
Competitive Intensity: Analyze the level of competition within the market. Lower competition allows for easier market penetration and potentially higher profit margins.
Market Profitability: Investigate the potential profitability of the market. Higher profitability indicates greater potential returns on investment, making it a more attractive opportunity.
Barriers to Entry: Assess the barriers preventing new competitors from entering the market. Lower barriers make it easier for new entrants, potentially leading to increased competition and reduced profitability.
Cyclicity: Consider the market's sensitivity to economic cycles. Markets with less cyclicality are more stable and resilient to economic downturns, offering greater security and consistency in returns.
Risk: Evaluate the overall risk associated with operating in the market. Lower-risk markets provide a more stable operating environment, reducing uncertainty and potential negative impacts on investment outcomes.

Potential to Succeed

According to McKinsey, there are five key factors to consider when you’re weighing up your ability to succeed in a market. These are:

Market Share: The bigger your share of the market, the better your chances of competing effectively.
Scale within Portfolio: The more important a product, service, or geographical area is to your company, the more resources and attention you should dedicate to it.
Margin Percentage: Higher profit margins give you more room to invest in sales and marketing efforts.
Relevant Differentiation: If your offering stands out from competitors and matters to your target customers, you'll have a stronger competitive edge.
Ability to Serve: Your ability to meet the needs of your core audience directly impacts your ability to compete.

Making Strategic Choices

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