WEEK 2 (chapter 5) Flashcards
(37 cards)
What is industry analysis?
Research into the potential of an industry, defined as a group of firms producing similar products or services.
How does competitor analysis differ from industry analysis?
Competitor analysis focuses on evaluating specific competing firms in detail, rather than the industry as a whole.
What is the purpose of industry analysis for entrepreneurs?
To evaluate if the industry is viable, accessible, and strategically suitable for launching a business.
What three key questions should be asked before entering an industry?
- Is the industry accessible?
- Is it open to innovation or underserved?
- Can we position ourselves to avoid downsides?
What does it mean to assess whether an industry is “accessible”?
To evaluate whether the firm can realistically enter and compete in the industry.
What does it mean for an industry to be “underserved”?
It has unmet needs or outdated incumbents — opportunities for innovation exist.
Why is positioning important at both the company and product level?
Because avoiding industry downsides requires strategic choices about how the business and its offerings are placed in the market.
two techniques for industry analysis
- studying industry trends
- the 5 forces model of Michael porter
What are the two main types of TRENDS (1) to study in industry analysis?
Environmental trends (external forces)
Business trends (industry-specific patterns)
What are environmental trends?
External forces that influence industries, such as economic, social, technological, and political/regulatory changes.
Give examples of environmental trends.
- Economic shifts
- Social changes
- Technological advances
- Political/regulatory shifts
What are business trends?
Changes in the way firms operate internally, including innovations in procurement, outsourcing, and technology-driven cost savings.
Why are industry trends important in feasibility and competitor analysis?
They help predict where opportunities or risks will emerge, and show which industries may benefit or suffer from these changes.
Do all industries benefit equally from business trends?
No, some industries benefit more from trends like outsourcing or tech savings than others.
What is the purpose of Porter’s Five Forces Model?
To evaluate industry structure and profitability by analyzing five competitive forces.
What are the five forces in Porter’s model?
- Threat of substitutes
- Threat of new entrants
- Rivalry among existing firms
- Bargaining power of suppliers
- Bargaining power of buyers
What are ways start-ups can overcome entry barriers?
With a unique idea, strong team, or first-mover advantage.
What increases rivalry among existing firms?
- More competitors
- Low product differentiation
- Low industry growth
- High fixed costs
Why does high rivalry hurt profitability?
It causes price wars, lower margins, and less customer loyalty.
does this increase or decrease supplier power: Suppliers can “integrate forward” (sell directly)
increase
does this increase or decrease the buyers power: Buyers can “integrate backward” (make it themselves)
increase
What are four strategic questions the Five Forces Model helps answer?
- Should we enter this industry?
- Can we find a unique position?
- Can we reduce threats/increase profitability?
- Can we design a business model that’s hard to copy?
What is an emerging industry?
A newly forming industry with no clear rules or standards; high risk but high opportunity through first-mover advantage.
What characterizes a fragmented industry?
Many small, similarly sized firms; opportunity lies in becoming a leader via a roll-up strategy (acquiring others in different regions).
