Industry Analysis Flashcards
What is strategy?
creating a unique and valuable position using a different set of activities
What is industry?
a group of firms that supplies a market for a specific product or service
What are the 5 parts of Porter’s 5 Forces Model?
rivalry, entry, substitutes, consumers, suppliers
What is the goal of 5 Forces Model?
long-term average potential profitability
What is the first thing you want to do when conducting an industry analysis?
define industry boundaries
What are the 4 factors when analyzing an industry?
government, industry growth rate, complements, technology & innovation
What is the profit equation?
price * quantity - cost
What are the 2 parts that make up rivalry?
intensity & basis of competition
When is rivalry high? What kind of margins does this create?
when there are more competitors and creates lower margins of profit
Fragmented market
numerous small companies, no dominant one, many players
Concentrated market
a couple large companies that dominate the market, fewer players
When companies are equal size, what does that mean for competition?
it increases
What are incumbents?
companies already in industry
What are the 2 ways to think about entry?
threat of entry and barriers to entry
When are substitutes more powerful?
if price performance is high
