Case Interview Question #00300: A friend of yours wanted to start his own business. His start-up idea was to open up a new car tire manufacturer in the US despite there being another 7 major players in the car tire market (Bridgestone, Goodyear, Michelin, Continental, Cooper, Pirelli, Hankook).
Since you work as a management consultant at a top firm, you were asked by your friend to help estimate the potential for the business. First of all, you’d have to estimate how many car tires your friend’s company can sell in a year in the US. You should walk me through your analysis and come up with a reasonable number quickly.
This a market sizing case to estimate the US annual market size for car tires. One could start by estimating the number of cars in the US. From there, making some assumption about average replacement rate for car tires, one could calculate the number of car tires that need to be consumed every year. The job candidate might say something like:
So, there are about 300 Million people in the US at the moment. I’d say 2/3 own a car, so lets say 200M cars at the moment.
Note: The last part of the case (car tires that last forever) is somewhat similar to the two “eternal light bulb” cases “GE Defines Pricing Strategy for Eternal Light Bulb“, and “GE Develops Eternal Light Bulb That Lasts Forever“, so you may want to check out solutions to those two cases too.