Term
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Definition
- threat of new entrants
- bargain power of suppliers
- bargain power of buyers
- rivalry among firms
- threat of substitutes
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Term
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Definition
| business research that focuses on the potential of an industry |
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Term
| what might industry analysis serve as? |
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Definition
-help determine whether or not to enter an industry
-determine if there’s a niche that acts as competitive advantage |
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Term
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Definition
environmental trends
-economic
-social
-tech advances
-political/regulatory
business trends:
-business-related but are not environment trends |
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Term
| Porter’s 5 forces (NESSbr) |
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Definition
-threat of newentrants
-threat of substitutes
-bargain power of suppliers
-bargain power of buyers
-rivalry among other firms |
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Term
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Definition
-substitutes determine how much a consumer is willing to pay.
not many substitutes for medicine, therefore profitable pharmaceuticals
-industry profitability gets suppressed when close substitutes become available. consumers will opt out if price gets too high
-firms often additional amenities to deal with this. eg. coffee shops not only offer coffee, but also provides a pleasant atmosphere. |
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Term
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Definition
number & balance of competitors:more the competitor the more likely prices will start to drop to compete
degree of difference:
how different are the products
industry growth rate:
competition in slow-growth industries are stronger than fast-growth
level of fixed costs:
firms w/ higher fixed costs must sell higher volume to break even |
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Term
| bargaining power of suppliers: |
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Definition
can suppress profitability by raising prices or reducing quality
supplier concentration:
only a few suppliers with a critical product
switching costs:
are fixed costs buyers encounter when changing suppliers. makes buyers lesslikely to switch suppliers.
attractiveness of substitutes:
supplier power strengthens if no attractive substitutes available
threat of forward integration:
supplier power strengthens if possibility that supplier may enter buyer’s industry |
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Term
| bargaining power of buyers: |
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Definition
buyers can suppress profitability by demanding lower prices or higher quality from suppliers
buyer group concentration:
few large buyers buying from many suppliers, they can demand lower costs
buyer’s costs:
greater importance of item to buyer, the more sensitive the buyer will be about price
degree of standardization of supplier’s products:
difference in supplier’s products affects buyer’s bargaining power
threat of backward integration:
buyer’s power increases if chance that the buyer might enter supplier’s industry |
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Term
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Definition
is industry a realistic place for a new venture?
are there areas we can avoid suppressing industry profitability?
is there a unique position in the industry that avoids suppressing industry profitability?
is there a superior business model that industry incumbents would find hard to duplicate? |
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Term
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Definition
one way a firm may try to stop another firm from entering the industry
-economies of scale
-product differentiation
-capital requirements
-cost advantages independent of size
-access to distribution channels
-gov/legal barriers |
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Term
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Definition
-strength of the management team
1-first-mover advantage - start-up who pioneer’s an industry or concept w/i, they’ve established themselves.
-passion of the management team and employees
-unique business model
-special internet domain name
1-inventing new approach to an industry
-and executing approach in an exemplary |
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Term
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Definition
| creates a cost disadvantage if a firm tries to compete with a large economy scale firm. which occurs when mass-producing a product results in lower average costs. |
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Term
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Definition
| firms who’ve made a name for themselves. who have a valuable brand. eg competing with pepsi or coca-cola |
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Term
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Definition
| massive start-up costs. eg automobile industry |
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Term
| cost advantages independent of size: |
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Definition
| firms who own assets that have since rapidly risen in price from when they bought it |
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Term
| access to distribution channels: |
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Definition
| firms that make it hard for competitors to enter because they’ve already gained a place that a new firm would have to replace. eg new energy drink taking place of one already on the shelf |
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Term
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Definition
| firms that are knowledge-intensive (biotechnology, patents, copyrights all form barriers) or banking, which requires licensure |
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Term
Types of industries:
emerging industries: |
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Definition
first-mover advantage
standard operating procedures haven’t yet been developed
fragmented industries: consolidation |
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Term
Types of industries:
fragmented industries |
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Definition
consolidation
characterized by a large number of firms of aprox. equal size |
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Term
| Types of industries:mature industries |
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Definition
process innovation, after-sale service innovation
experiencing slow or no increase in demand |
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Term
| Types of industries:declining industries |
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Definition
leadership, estab. a niche market, and pursuing a cost reduction strategy
experiencing a decline in demand |
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Term
| Types of industries:global industries |
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Definition
multidomestic and global strategies
experiencing significant global sales |
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Term
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Definition
-detailed analysis of firm’s competition
-helps understand positions of major competitors and available opportunities
-grid is used to organize data collected about competition
grid shows how you stack up against rivals. provide markets to pursue. identify primary sources of competitive advantage. |
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Term
| The five primary industry types and the opportunities they offer |
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Definition
-emerging/first-mover advantage
-fragmented industry/consolidation
-mature industry/emphasis on service and process innovation
-declining industry/leadership, niche, harvest, and divest
-global industry/multidomestic strategy or global strategy |
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Term
| a new firm faces 3 different kinds of competitors |
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Definition
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Term
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Definition
| businesses offering identical or similar products |
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Term
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Definition
| close substitute products |
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Term
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Definition
| businesses that are not yet direct of indirect competitors but could be at any time |
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Term
| ways a firm can obtain information about a competitor |
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Definition
-attend conferences and trade shows
-purchase competitor’s products
-study their websites
-google email alerts
-read industry-related books, magazines, and websites
-talking to customers about why they choose your product over the competitors’ |
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Term
| competitive analysis grid |
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Definition
(a tool for organizing information a firm gained about its competitors)
-see how we stack up against others
-ideas for markets to pursue
-identify the primary resources of competitive advantage |
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Term
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Definition
| how we relate in comparison to our competitors |
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