Why Market Entry Plans Need an Outside View

Almost every leadership team agrees that growth planning needs an outside view. Far fewer stop to ask what that means in practice. In decision research it has a precise meaning, and it changes how a market entry plan should be judged.

Rule of thumb: your plan tells you how things could go, and the companies that went before you show how things usually go.

KEY TAKEAWAY

The outside view means judging your plan against what happened to comparable companies, and not only against the details of your own case. It is one of the few corrections for over-optimism that has decades of evidence behind it.

THE CHALLENGE

Most expansion plans are written from the inside. The team knows its product, its people and its strengths, so it builds a forecast out of those details. Decision researchers call this the inside view. It feels rigorous because it is detailed, and that is exactly why it tends to run optimistic. Daniel Kahneman described a good example. A team designing a school curriculum estimated that it would take 18 to 30 months. When he asked an experienced curriculum developer on the team about similar projects, the expert recalled that about 40% had never finished, and that none of the ones that did had taken less than seven years or more than ten. The team completed its project eight years later. The team was capable and well prepared, and it forecast from the details of its own case instead of from the record of cases like theirs.

In Bent Flyvbjerg's research on transport projects, rail passenger demand came in 51.4% below forecast on average, and 84% of rail projects missed their demand forecasts by more than 20%.

Those are infrastructure projects, not market entries, but they show how far a well-prepared plan can sit from the outcome when the forecast is built from the inside only.

For a company looking at Southeast Asia, the stakes are practical. The region is ten countries with a combined population of 671.7 million people, and a plan that assumes the first market will behave like the home market can cost a year of runway before anyone notices.

WHAT THE EVIDENCE SHOWS

What is the outside view, and does it work for business decisions?

The outside view means setting aside the unique details of your project for a moment and asking what happened to a group of similar projects. Kahneman and Tversky first set out the distinction, and the approach that grew from it is known as reference class forecasting.

It holds up in commercial settings. In a 2012 study in the Strategic Management Journal, Lovallo, Clarke and Camerer tested how executives use analogies in private equity investment decisions and film revenue forecasting. Drawing on a broad set of comparable cases produced better results than leaning on a few familiar examples. The lesson for a growth team is that the quality of the comparison matters as much as the analysis built on top of it.

What do similar market entries actually look like?

No single study gives one failure rate for companies entering Southeast Asia, so the honest answer is a range drawn from several places, each with its own limits.

Research on new exporters in Colombia, published by the National Bureau of Economic Research, found that nearly half of exporters in any year had not been exporting the year before, and that the survival rate of first-year exporters was typically around one third. A separate study of US import data found that the median duration of exporting a product to the United States is only two to four years, with the risk of failure falling sharply for those that last through the early years.

How a company enters matters as well. In a study of foreign subsidiaries in US computer and pharmaceutical industries, Jiatao Li found that acquisitions and joint ventures were more likely to exit than greenfield subsidiaries, and that firms with earlier foreign experience did better on later investments. Mata and Freitas later found that the gap in exit rates between foreign and domestic firms widens with age instead of closing.

For an Asian picture, the most useful official source is JETRO's annual survey of Japanese-affiliated companies across Northeast Asia, ASEAN, Southwest Asia and Oceania. In the 2023 survey of 4,982 companies, 62.4% were profitable and 18.9% reported a loss. In 2024, among 5,007 companies, 65.8% expected a profit and 16.7% expected a loss. These are experienced foreign operators, and roughly a third of them were still not reporting a profit. The figures describe Japanese-affiliated firms only, so they are one reference point and not a universal rate.

Can public signals show where other companies are heading?

Often they can, with some care. Job postings are public and dated, and they describe what a company intends to do, which makes them one of the few forward-looking signals anyone can read for free.

Gutiérrez, Lourie, Nekrasov and Shevlin found that changes in a company's online job postings are positively associated with changes in its future performance. A study of Taiwanese listed companies by Lo, Koedijk, Gao and Hsu reached a similar conclusion, and Acemoglu, Autor, Hazell and Restrepo showed how a company's investment in a new capability becomes visible in the roles it advertises.

There are limits worth respecting. Research by Dalton, Kahn and Mueller suggests that online postings capture only part of real hiring, so a posting is a useful clue and never a complete picture. A 2023 study by Chen and Li also found that, for high-skill roles, vacancies that take longer to fill were linked to stronger later profitability, because careful hiring takes time. Reading these signals well takes judgement and local context.

Why does the information environment matter in Southeast Asia?

Part of what other companies reveal about their plans sits in local languages and on local platforms. Teams that rely only on English-language sources tend to see a thinner and later version of the story. Indonesia alone has 718 regional languages mapped by its education ministry, which is a reminder of how varied the information environment can be inside a single country.

WHAT IT MEANS FOR LEADERS

1. Question the forecast before you fund it. A plan built only from the inside tends to describe the best case. Leaders who ask how similar companies actually fared are testing the plan against reality before the money is committed.

2. Treat other companies' public activity as evidence. Hiring, local content and registrations are records of decisions other companies have already made with their own money. They say a lot about how long things took and which early steps came first.

3. Plan for a range, not a single story. A single forecast invites a single outcome. Research on foreign subsidiaries describes a dip in performance in the first years after entry, so a plan that funds only the smooth version can run out of room while the typical path is still on track. Agreeing in advance what a slower-than-planned year looks like protects good initiatives from being judged failures and shut down too early.

RECOMMENDED NEXT STEPS

• A question to ask now. Which number in your expansion plan is the most optimistic, and what do you know about how companies like yours performed on it?

• An assumption to challenge. Does your plan assume the new market will behave like your home market, and what evidence supports that?

• A signal to keep watching. How are comparable companies and your closest rivals moving into the markets you are considering?

CONCLUSION

The outside view adds a fair test to the detail of your own plan. The most useful question a leadership team can ask before committing to a new market is how long it took companies like theirs to get there, and what their own plan assumes that the record does not support. The answers are rarely simple, and they are worth having before the budget is set.

ABOUT AFINITIQ

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CALL TO ACTION

Planning a move into Southeast Asia or APAC and want a second view on your plan? Let's talk.

Dimension	Why it matters
The comparison	Looking at how similar companies fared gives you a range of outcomes, which is more useful than one forecast built from your own details.
Exits as well as survivors	Including companies that scaled back or left keeps the odds honest, because a list of winners makes every plan look safer than it is.
Public signals	Hiring and local activity show when other companies committed to a market and how long it took before customers appeared.
Local-language sources	Part of the picture sits on local platforms, so reading only English sources shows a thinner and later view.
A range, not a single date	Plans funded against the typical spread survive a slow first year, while plans built on the best case tend to be judged too early.