Industry & Competitors Analysis

Rangkuman Introduction to Entrepreneurship

Industry & Competitors Analysis

•       Industry

–     An industry is a group of firms producing a similar product or service, such as airlines, fitness drinks, furniture, or electronic games.

•       Industry Analysis

–     Is business research that focuses on the potential of an industry.

Techniques Available to Assess Industry

Assesing Industry Attractive

·      Study enviromental and business trends

·      The Five Competitive Forces Model

1.   New entrants

2.   Suppliers

3.   Substitutes

4.   Buyers

5.   Rivalry among existing firm

Threat of substitutes

·      Pricw that consumers are willing to pay of a product depends in part on the availability of subtitute products.

Threat of new entrants

·      If the firms in an industry are highly profitable, the industry becomes a magnet to new entrants

Rivalry among existing firms

·      The major determinant of industry profitability is the level of competition among existing firms

Bargaining powers of suppliers

·      Suppliers can suppress the profitability of the indsutries to which they sell by raising prices or reducing the quality of the components the provide

Bargaining power of buyers

·      Buyer can suppress the profitability ogf the industries from which they purchase by demanding price consessions or increases in quality

First application of the five forces model

·      The five forces model can be used to assess the attractiveness of an idustry by determining the level of threat to industry profitability for each of the forces

Second application of the five forces model

·      A new firm can apply the five forces model to help determine whether it should enter an industry is by using the model to answer several kew questions

Industry types and the opportunities the offer

·      Emerging industries : industries in which standard operating producedures have yet to be developed

·      Fragmented industries : industries that are characterized by a large number of firms of appoximately equal size

Competitor analysis

What is a competitor analysis?

·      A competitor analysis is a detailed analysis of a firm’s competition

Indentifiying competitors

·      Direct competitors

·      Indirect competitors

·      Future competitors

Sources of competitive intelligence

·      Colleting competitive intelligence : to complete a competitive analysis grid, a firm must first understand the strategies and behaviors of its competitors

Completing a competitive analysis grid

·      Competitive analysis grid : a tool for organizing the informatiin a firms collects about its competitors