risks and competitive advantage Flashcards
key components of a opportunity assessment
address a real/perceived need
market potential
technological feasibility
economics of the opportunity
unique sustainable value proposition and competitive advantage
degree of fit
steps of a market analysis
how large is the market?
how fast is it growing?
who will buy the product?
what need/perceived need does it fill?
what segment of the market are you targeting?
five forces model and theorist
michael porter
FIVE FORCES
threat of new entrants larger the pool of new entrants, the less attractive it is. this is because low barriers to entry are attractive to new firms. these new entrants compete for market share and compete away the profits. this means all firms in the market (assuming it’s perfectly competitive) make small profit
bargaining power of buyers critical in setting prices
threat of substitute products or services can turn industry on head
rivalry among existing firms strongest of five forces
bargaining power of suppliers the greater the leverage of suppliers, the less attractive the industry
ways to create barriers to entry
economies of scale falling average cost per unit as the volume per period increases
learning curve falling costs per unit based on cumulative experience in producing the product high capital requirements
patents
brand name
product differentiation thus customer loyalty
government policy
distribution channel access
switching costs
DEFINTION incumbent inertia
reasons for incumbent inertia
when you’re in the middle of a change, you are innovating but your employees are not keen on adopting new things
reasons
may be locked into specific technology
may be reluctant to cannabilise exisiting products
organisation inflexibility
DEFINITION window of opportunity
metaphor describing time period in which a firm can realistically enter a market
stages of window of opportunity
spotting the window
creative, personal or organisational analysis
know the market and concentrate on needs
opening the window
setting up the organisation and entering the network
attracting key stakeholders
needs initial cash
moving through the window
developing the organisation
sustaining demand
managing cash flow
maintaining investment
closing the window
continuous innovation
advantages and disadvantages of capturing first-mover advantage
advantages
no competition
customer loyalty
space/location
brand generalisation
patent protection
learning curve
disadvantages
can’t copy first mover and avoid negatives/learn from them
greater risk
difficult to get finance
