Market Attractiveness and Value Pools:
choose where to play by value, access and right-to-win

Which arenas offer defensible economic value?

A large market is not necessarily an attractive market, and an attractive market is not necessarily attractive to a particular organisation. “Where to play” requires three tests: external value, attainable access and right-to-win. Size is only the starting point.

The unit of analysis should be a strategic arena: a customer situation, outcome, offer, channel and geography in which alternatives genuinely compete. Administrative categories often hide substitution, complements, platforms and profit migration.

1. Define the arena

Describe:

• customer and decision situation;
• outcome and acceptable substitutes;
• product/service boundary;
• geography and channel;
• value-chain and ecosystem roles;
• present period and plausible future boundary.

Competition authorities define markets for a legal purpose, not corporate strategy, but their discipline is useful. The US merger guidelines treat product and geographic boundaries as tools for identifying meaningful competitive constraints and acknowledge that boundaries can be fuzzy and overlapping.¹ The European Commission similarly frames market definition around constraints on commercial decisions.²

2. Map value, not only revenue

Construct a value-pool map across the system:

• customer spending and economic benefit;
• revenue by activity and participant;
• gross profit, operating profit and cash requirements;
• bargaining power and risk allocation;
• control points such as distribution, data, standards or trust;
• migration of value under alternative scenarios.

Revenue can grow while the accessible profit pool contracts. Include implementation and switching costs, working capital, partner economics and regulatory burden.

3. Score attractiveness

Use a transparent scorecard rather than a single opaque index:

1. demand scale and quality;
2. growth durability and cyclicality;
3. willingness and ability to pay;
4. industry economics and value-pool direction;
5. competitive intensity and substitutes;
6. access, regulation and trade cost;
7. ecosystem dependence;
8. strategic fit and transferable advantage;
9. investment, time and reversibility;
10. uncertainty and option value.

Weights must reflect strategy. Preserve component scores and evidence instead of presenting false precision.

4. Test the right-to-win

Attractiveness becomes actionable only after testing whether the organisation can create differentiated value and capture sufficient returns. Assess customer access, credibility, capabilities, data, partnerships, economics and response from incumbents. Ask which advantages are owned, contractible, reproducible or merely assumed.

5. Portfolio choices

Classify arenas as:

• Commit: attractive, evidence-backed and strong right-to-win.
• Option: promising but uncertain; buy learning through a bounded pilot.
• Partner: attractive but dependent on capabilities or access held elsewhere.
• Harvest: economically useful but structurally weakening.
• Avoid: inadequate value, access or fit.

Record the evidence and trigger that would move an arena between categories.

6. APAC and Hong Kong application

Market-access friction differs by sector and direction. The WTO Trade Cost Index captures transport, policy, regulatory, communication and transaction frictions and reports substantial cross-sector and regional variation.³ Entry analysis should therefore avoid applying one country score to every offer.

Hong Kong may be attractive as an end-market, regional base, financing and professional-services node, or partnership gateway. Each role has different accessible pools and competitors. Use Hong Kong C&SD trade, services and business statistics as baselines, then map cross-border flows and partner economics.

7. AI-native application

AI can assemble comparable indicators, extract competitor economics and surface boundary alternatives. Human analysts must validate definitions, avoid double counting, distinguish estimates from observed data and challenge correlations mistaken for causal drivers.

8. Decision output

Produce an arena dossier, value-pool map, attractiveness evidence matrix, right-to-win assessment, scenario sensitivity and portfolio recommendation. State what must be true, what is missing and the cheapest next evidence.

9. Decision playbook

Begin with a long list of arenas, then apply exclusion gates for strategic incompatibility, legal infeasibility and unacceptable downside. Deep analysis should focus on the smaller set where better evidence can change resource allocation. For each finalist, model current value, structural change and client-specific capture.

Use a boundary sensitivity test: repeat the assessment under a narrower and broader definition. If attractiveness changes materially, the recommendation must explain which boundary is operationally relevant and what customer substitution evidence supports it.

Use a value migration test: ask which participant gains if price transparency rises, distribution consolidates, regulation changes, AI reduces one activity’s cost or customers internalise the work. This prevents historical profit pools from being mistaken for future opportunity.

10. Failure modes and challenge

Watch for market-size seduction, double counting across value-chain layers, extrapolating category growth into client revenue, ignoring customer acquisition and overstating synergy. An independent reviewer should build the best case against the preferred arena and identify the evidence that would reverse the ranking.

Attractiveness should be refreshed when a trigger changes—not on an arbitrary annual schedule alone. Triggers include a new substitute, altered regulation, channel concentration, price compression, capacity shock or evidence that the client’s supposed advantage is not valued.

Sources

1US Department of Justice and Federal Trade Commission, *2023 Merger Guidelines*, pp. 40 onward. https://www.ftc.gov/reports/merger-guidelines-2023

2European Commission, *Market Definition Notice* materials. https://competition-policy.ec.europa.eu/public-consultations/2020-market-definition-notice_en

3World Trade Organization, *Trade Cost Index: Methodology and findings*. https://tradecosts.wto.org/