Entrep Chap 5 Industry & Competitor Analysis

Question 1

What is the purpose of an industry analysis?

Answer 1

To assess the potential of an industry and determine feasibility for a new venture.

Question 2

What are the five competitive forces that determine industry profitability?

Answer 2

• Threat of substitutes
• Threat of new entrants
• Rivalry among existing firms
• Bargaining power of suppliers
• Bargaining power of buyers

Question 3

What role do barriers to entry play in an industry?

Answer 3

They create disincentives for firms to enter an industry.

Question 4

What are the nontraditional barriers to entry associated with entrepreneurial firms?

Answer 4

• Strength of management team
• First-mover advantage
• Passion of the management team and employees
• Unique business model

Question 5

List the four industry-related questions to ask before pursuing the idea for a firm.

Answer 5

• Is the industry accessible?
• Are there positions that avoid negative attributes?
• Does the industry have markets ripe for innovation?
• Are there underserved markets?

Question 6

What is an industry?

Answer 6

A group of firms producing a similar product or service.

Question 7

Why is industry analysis important?

Answer 7

It helps determine if a niche market identified during feasibility analysis is favorable for a new firm.

Question 8

What factors are included in firm-level factors?

Answer 8

• Assets
• Products
• Culture
• Teamwork
• Reputation
• Other resources

Question 9

What are industry-level factors?

Answer 9

• Threat of new entrants
• Rivalry among existing firms
• Bargaining power of buyers

Question 10

What is the Five Competitive Forces Model?

Answer 10

A framework for understanding the structure of an industry and the forces determining industry profitability.

Question 11

How do substitutes affect industry profitability?

Answer 11

The availability of substitutes can suppress profitability if consumers opt for alternatives when prices rise.

Question 12

What is a barrier to entry?

Answer 12

A condition that creates a disincentive for a new firm to enter an industry.

Question 13

What are some traditional barriers to entry?

Answer 13

• Economies of scale
• Product differentiation
• Capital requirements
• Cost advantages independent of size
• Access to distribution channels
• Government and legal barriers

Question 14

What is a nontraditional barrier to entry that start-ups might rely on?

Answer 14

Assembling a world-class management team.

Question 15

What factors determine the intensity of rivalry among existing firms?

Answer 15

• Number and balance of competitors
• Degree of difference between products
• Growth rate of the industry
• Level of fixed costs

Question 16

What can suppliers do to affect industry profitability?

Answer 16

They can raise prices or reduce the quality of components.

Question 17

What factors impact the bargaining power of suppliers?

Answer 17

• Supplier concentration
• Switching costs
• Attractiveness of substitutes
• Threat of forward integration

Question 18

How can buyers affect industry profitability?

Answer 18

By demanding price concessions or increases in quality.

Question 19

What factors enhance the bargaining power of buyers?

Answer 19

• Buyer group concentration
• Buyer’s costs
• Degree of standardization of supplier’s products
• Threat of backward integration

Question 20

What opportunities do emerging industries provide?

Answer 20

First-mover advantage.

Question 21

What opportunities are available in fragmented industries?

Answer 21

Consolidation.

Question 22

What opportunities exist in mature industries?

Answer 22

• Process innovation
• After-sale service innovation

Question 23

What opportunities are present in declining industries?

Answer 23

• Leadership
• Establishing a niche market
• Pursuing a cost reduction strategy

Question 24

What is a competitor analysis?

Answer 24

A detailed analysis of a firm’s competition to understand their positions and available opportunities.

Question 25

What is competitive intelligence?

Answer 25

Information gathered to learn about competitors.

Question 26

What are ethical ways to obtain competitive intelligence?

Answer 26

* Attend conferences and trade shows * Purchase competitor’s products * Study competitors’ websites * Set up email alerts

Question 27

What is referred to as competitive intelligence?

Answer 27

The information gathered by a firm to learn about its competitors ## Footnote Competitive intelligence helps firms understand competitor strategies and behaviors.

Question 28

What is a key consideration for new ventures when collecting competitive intelligence?

Answer 28

Collecting competitive intelligence in a professional and ethical manner ## Footnote Ethical practices are crucial to maintain integrity and trust.

Question 29

Name an ethical way to obtain information about competitors.

Answer 29

* 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 ## Footnote These methods ensure compliance with ethical standards.

Question 30

Why do many companies attend trade shows?

Answer 30

To display their products and see what their competitors are up to ## Footnote Trade shows provide valuable insights into competitor activities and industry trends.

Question 31

What is a competitive analysis grid?

Answer 31

A tool for organizing the information a firm collects about its competitors ## Footnote It helps firms visualize their competitive position and identify advantages.

Question 32

What can a competitive analysis grid help a firm achieve?

Answer 32

* See how it stacks up against competitors * Provide ideas for markets to pursue * Identify primary sources of competitive advantage ## Footnote This tool is essential for strategic planning.

Question 33

Fill in the blank: A competitive analysis grid can help a firm see how it _____ against its competitors.

Answer 33

[stacks up]