Entrep Chap 5 Industry & Competitor Analysis Flashcards
What is the purpose of an industry analysis?
To assess the potential of an industry and determine feasibility for a new venture.
What are the five competitive forces that determine industry profitability?
- Threat of substitutes
- Threat of new entrants
- Rivalry among existing firms
- Bargaining power of suppliers
- Bargaining power of buyers
What role do barriers to entry play in an industry?
They create disincentives for firms to enter an industry.
What are the nontraditional barriers to entry associated with entrepreneurial firms?
- Strength of management team
- First-mover advantage
- Passion of the management team and employees
- Unique business model
List the four industry-related questions to ask before pursuing the idea for a firm.
- Is the industry accessible?
- Are there positions that avoid negative attributes?
- Does the industry have markets ripe for innovation?
- Are there underserved markets?
What is an industry?
A group of firms producing a similar product or service.
Why is industry analysis important?
It helps determine if a niche market identified during feasibility analysis is favorable for a new firm.
What factors are included in firm-level factors?
- Assets
- Products
- Culture
- Teamwork
- Reputation
- Other resources
What are industry-level factors?
- Threat of new entrants
- Rivalry among existing firms
- Bargaining power of buyers
What is the Five Competitive Forces Model?
A framework for understanding the structure of an industry and the forces determining industry profitability.
How do substitutes affect industry profitability?
The availability of substitutes can suppress profitability if consumers opt for alternatives when prices rise.
What is a barrier to entry?
A condition that creates a disincentive for a new firm to enter an industry.
What are some traditional barriers to entry?
- Economies of scale
- Product differentiation
- Capital requirements
- Cost advantages independent of size
- Access to distribution channels
- Government and legal barriers
What is a nontraditional barrier to entry that start-ups might rely on?
Assembling a world-class management team.
What factors determine the intensity of rivalry among existing firms?
- Number and balance of competitors
- Degree of difference between products
- Growth rate of the industry
- Level of fixed costs
What can suppliers do to affect industry profitability?
They can raise prices or reduce the quality of components.
What factors impact the bargaining power of suppliers?
- Supplier concentration
- Switching costs
- Attractiveness of substitutes
- Threat of forward integration
How can buyers affect industry profitability?
By demanding price concessions or increases in quality.
What factors enhance the bargaining power of buyers?
- Buyer group concentration
- Buyer’s costs
- Degree of standardization of supplier’s products
- Threat of backward integration
What opportunities do emerging industries provide?
First-mover advantage.
What opportunities are available in fragmented industries?
Consolidation.
What opportunities exist in mature industries?
- Process innovation
- After-sale service innovation
What opportunities are present in declining industries?
- Leadership
- Establishing a niche market
- Pursuing a cost reduction strategy
What is a competitor analysis?
A detailed analysis of a firm’s competition to understand their positions and available opportunities.
What is competitive intelligence?
Information gathered to learn about competitors.
What are ethical ways to obtain competitive intelligence?
- Attend conferences and trade shows
- Purchase competitor’s products
- Study competitors’ websites
- Set up email alerts
What is referred to as competitive intelligence?
The information gathered by a firm to learn about its competitors
Competitive intelligence helps firms understand competitor strategies and behaviors.
What is a key consideration for new ventures when collecting competitive intelligence?
Collecting competitive intelligence in a professional and ethical manner
Ethical practices are crucial to maintain integrity and trust.
Name an ethical way to obtain information about competitors.
- Attend conferences and trade shows
- Purchase competitor’s products
- Study competitors’ Web sites
- Set up Google and Yahoo! e-mail alerts
- Read industry-related books, magazines, and Web sites
- Talk to customers about their purchasing motivations
These methods ensure compliance with ethical standards.
Why do many companies attend trade shows?
To display their products and see what their competitors are up to
Trade shows provide valuable insights into competitor activities and industry trends.
What is a competitive analysis grid?
A tool for organizing the information a firm collects about its competitors
It helps firms visualize their competitive position and identify advantages.
What can a competitive analysis grid help a firm achieve?
- See how it stacks up against competitors
- Provide ideas for markets to pursue
- Identify primary sources of competitive advantage
This tool is essential for strategic planning.
Fill in the blank: A competitive analysis grid can help a firm see how it _____ against its competitors.
[stacks up]
