3

e
ut
INDUSTRY AND

rib
COMPETITIVE ANALYSIS

t
d is
The future ain’t what it used to be.

Often credited to Yogi Berra

or
An organization’s ability to learn, and translate that learning
t,
into action rapidly, is the ultimate competitive advantage.
s
Jack Welch, CEO of General Electric (1981–2001)
po

CHAPTER LEARNING OBJECTIVES

,
py

Upon completion of this chapter, you will be able to

Defend the importance of macroenvironmental analysis

co

Summarize the components of the macroenvironment and their impact on

business ventures
Compare the different stages of industry development
t

Apply the five forces model of competition to your new business venture
no

Describe different types of competitive analyses

Explain the process of creating a new business model
o
D

ASSESSING THE INDUSTRY

In Chapter 2, you evaluated your idea for a new or modified product, service, or
business, as well as assessing the idea at the root of this innovation, the idea in search

56
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 Chapter 3  ■  Industry and Competitive Analysis   57

of one or more potential opportunities. You analyzed the essential steps that need
to be taken in evaluating the potential market niche. Potential adopters were next
identified as those categorized as either innovators or early adopters. Issues such as
the “burn rate” of your financial capital and the length of time needed to obtain
sustaining sales revenues were determined. Your potential adopter screening was

e
employed to evaluate the market viability of your proposed new business venture.
Your research allowed you to define clearly how your product, service, and business

ut
create value for your potential adopters. Business to adoption was analyzed in depth
to avoid attempting to create a new business that is likely to fail. Both technical

rib
and competitive risk were analyzed. Your research was not theoretical, but it was
seriously analytical.
In this chapter, your analytical research continues as you master the applica-

t
tion of macroenvironmental analysis, cross impact analysis, and environmental

is
screening, all for the purpose of being better at recognizing the reality that most
forces of change come from without. The more analytical expertise you gain, the

d
more skilled an entrepreneur you become at the early recognition of new market
opportunities, as well as serious potential threats. You will learn how to evaluate
the level and nature of competitive behavior by applying Michael Porter’s “five

or
forces model.” Competitive assessment will be determined through your asking and
answering a series of questions designed to provide you with insight into the behav-
iors of the anticipated competitors. This analytical assessment of the behaviors of
t,
each competitor will lead to answers regarding the entrepreneur’s business model
s
form and function.
po

THE MACROENVIRONMENTAL
ANALYSIS PROCESS
,
py

A humbling reality is the power of the external macroenvironment to change or reshape

the competitive environment of any industry. Radical and disruptive technologies have
become an accepted force in many markets and within many industries. Some macroen-
co

vironmental forces, trends, and events happen gradually while others take the market by
surprise. An entrepreneurial firm attuned to potential changes can benefit dramatically
through developing new products or services based on where the market is trending rather
than where the current market focus resides. By correctly forecasting trends, an entrepre-
t

neur can achieve rapid market penetration and high levels of profitability through having
no

new products or services available when the market changes. Sometimes, these changes
create new market niches.
“First to market” business strategies can produce outstanding profits and help estab-
lish a new business venture in the evolving market.
o
D

Critical Forces, Trends, and Events

Unfortunately, many entrepreneurs do not focus on what they choose to describe as
“futuristic events.” Assessing the potential forces, trends, and events that are the foun-
dation of the macroenvironment may be perceived to be less relevant to business leaders

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 58   Launching Successful Ventures

than understanding the short-term competitive forces that are influencing their immedi-
ate decisions. Entrepreneurs need to recognize the value off mastering the skills that allow
them to be capable of “looking both ways.” Being skilled at recognizing and tracking the
forces, trends, and events that comprise the drivers of change allows the entrepreneur the
time to gather and redirect a firm’s limited resources in order to develop and deliver new

e
products and services to gain a competitive position in the emerging new market niche.
In today’s competitive environment, the ability to reposition a business through superior

ut
flexibility can be a major factor in achieving and retaining market growth.
Figure 3.1 represents the interactions that exist among the major macroenviron-

rib
mental forces in the competitive environment and demonstrates the dynamics of those
interactions.
Observe that a change in one of the macroenvironmental factors produces changes

t
to all the other factors. A classic example of this interaction was the development of

is
a safe and affordable female contraceptive pill. More than just a new piece of tech-
nology, “the pill” allowed women to feel more empowered because they had greater

d
control over their lives and reproductive health. These lifestyle changes resulted in
women having an increased opportunity for higher education, increased participation
in the workforce, and increased active participation in changing federal and state

or
laws. This new piece of technology ushered in unprecedented reproductive rights,
which led to changes in the legal structure of our own society, changes in the tim-
ing of family creation and to traditional familial roles, on the individual level, and
t,
changes in the redistribution of earnings among the genders, on the national level.
s
So the invention and marketing of the pill led to changes in both the US society and
economy. Globally, laws that promote equal pay for equal work in an attempt to level
po

the economic playing field and address gender discrimination have been written and
enacted in response to these changes, though there is still work to be done on this
front. Clearly, the list of impacts on society could go on for pages. The key point to
understand is that all components of the macroenvironment are interconnected, and
,

these dynamic forces can result in the modification of society while creating a wide
py

array of new business opportunities.

Cross Impact Analysis and Environmental Scanning

co

The exciting and dynamic insights provided by a macroenvironmental model lie in

what is termed cross impact analysis. The occurrence of any single event changes the
probability of the occurrence of all other events. What cross impact analysis does for
t

the entrepreneur is generate an increasing awareness of the need to scan the environment
no

actively. Environmental scanning is the process through which changes in the environ-
mental sectors are tracked and evaluated. The goal is to identify the impact of those
factors with the highest probability of influencing the future of the market niche in which
o

you plan to compete. Scanning, evaluating, and assessing these factors is essential to
determining potential impacts on the business. The value of environmental scanning is
D

the identification of new opportunities and potential threats in time to take advantage of
the first and avoid or defend against the second. Shifts in a major environmental factor,
such as demographics, occur very slowly yet have a profound impact on our society. As
an example, due to improvements in medicine and changes in lifestyle, Americans in the

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 Chapter 3  ■  Industry and Competitive Analysis   59

baby boom generation are living longer and staying healthy longer. Also, many are quite
wealthy, as the passing of their parents’ generation produced the greatest transfer of wealth
in recorded history. Consequently, new market opportunities have been created to serve
the needs and wants of this older, healthier, and wealthier population. For instance, a new
market niche that might be termed “wealth preservation” has been created; businesses in

e
this niche provide financial services designed to ensure that this aging population will not
outlive resources.

ut
As discussed, cross impact analysis is an analytical tool that further enriches the
entrepreneur’s understanding of the dynamic interactions of the macroenvironment.

rib
The occurrence of an event in the macroenvironment has the effect of potentially
altering the occurrence of other events. The analysis of the “cause and effect” provides
the entrepreneur with a deeper and richer understanding of the forces that continu-

t
ally impact to alter the macroenvironment. Scanning the macroenvironment for these

is
cross impact occurrences allows the entrepreneur to recognize new opportunities early
enough to possibly profit from their creation. Environmental scanning and cross impact

d
analysis are analytical tools that, when mastered, enhance the entrepreneur’s ability to
achieve first mover advantage in new or evolving markets.
Your macroenvironmental analysis will need to focus on the four most critical major

or
components: the economic environment, the technological environment, the sociopoliti-
cal environment, and the demographic and lifestyle environment. Understanding the vir-
tually continuous interactions of these components within the overall macroenvironment
t,
will provide greater insight into current and future changes.
s
po

FIGURE 3.1  ■  Macroenvironmental Interactions

,

Economic
py

Environment
co

Demographic and Sociopolitical and

New
t

Lifestyle Regulatory
no

Opportunities
Environment Environment
o
D

Technological
Environment

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 60   Launching Successful Ventures

COMPONENTS OF THE
MACROENVIRONMENT
Economic Environment

e
In a global economic environment, the entrepreneur is required to remain vigilant about

ut
any and all economic changes that have the potential to impact her or his business. As an
example, the supply and demand for essential raw materials and commodities are truly
global in scope. The price that an entrepreneur will be required to pay for a commod-

rib
ity such as oil, corn, wheat, copper, or other natural materials is determined by global
supply and demand. A failure to track trends and make needed adjustments can be dev-
astating to profit margins in a period of rapidly rising costs if an entrepreneur is unable

t
to raise prices due to competitive pressures. Entrepreneurs who are dependent on critical

is
commodities need to scan the futures market continually looking for trends related to
needed commodities and take action to hedge their long-term cost.

d
On a national level, the entrepreneur is bombarded by economic factors that could be
either an opportunity or a serious threat. For example, if interest rates are a critical factor

or
in the firm’s operations, it is necessary to follow closely the actions and pronouncements
of the United States Federal Reserve and those of similar entities in other politically and
economically dominant nations. Anticipating higher interest rates in the near future, for
t,
example, an entrepreneur might arrange for long-term borrowing to be done quickly to
avoid the rising cost that higher interest rates will create. What if you discover indications
s
of a growth in family income? How might your business be affected by this growth? Do
po
increases in housing starts in your community impact your sales? Entrepreneurs need to
develop models that reflect accurately the economic variables with positive and negative
effects on their specific businesses. The next step is to identify an accurate and reliable
source of economic data and forecasting that will inform their economic models of what
,

actions need to be taken.

py

In reality, the number of economic variables that interact to shape the environment in
which a business operates can become overwhelming. The entrepreneur does not want to
experience “paralysis from analysis” in making timely decisions, but the most significant
co

economic variables that impact critical decisions must be noted, analyzed, and integrated
into the decision-making process.

Technological Environment
t
no

The past few decades has witnessed a series of one major technological breakthrough after
another. By all indications, this pattern of explosive and often disruptive technological
change has become the norm for our society. Technological advances are now global in
scope and are a worldwide phenomenon. Facilitated by the Internet, new technologies
o

are quickly distributed to an eagerly awaiting audience. As a global society, we have an

increasing expectation that technology will solve problems and provide for a better life.
D

Technology has, for many industries and markets, become a disruptive and volatile force
driving the other components of the macroenvironmental model. Explosive technological
changes have reshaped industries and created new, untapped market niches. In many of

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 Chapter 3  ■  Industry and Competitive Analysis   61

these cases, the biggest beneficiaries have been the entrepreneurs who were prepared to
enter, and even dominate, these emerging markets.

Sociopolitical Environment

e
Social and political forces, trends, and events are analyzed to determine the long-term
societal forces that will likely affect the behavior of society. Political trends analysis

ut
attempts to forecast future laws and regulations that either support or impede a busi-
ness’s ability to operate efficiently and achieve its targeted growth. In America, industries

rib
and companies continually lobby lawmakers to enact legislation that will provide a posi-
tive economic environment, one that is to their competitive advantage. An entrepreneur
needs to track carefully the progression of federal, state, and even local legislation to

t
become alert to potentially damaging legislation that could negatively impact markets

is
and products.
Changes in the makeup of society will often generate new potential market. On a very

d
simple and basic level, the immigrants to the United States bring with them their cultural
preferences for particular foods and lifestyles. Thus, new market niches in the restaurant

or
industry are continually reflecting changing tastes and a demand for ethnically rich cui-
sine. When we consider a variety of societal changes in process, our analysis must provide
an understanding of deep-seated trends. Professional couples with two above-average
incomes and one or two children, who were motivated to ensure that the children would
t,
attend the better universities, were responsible for creating a market niche of high-end
s
prekindergarten schools, as well as academically intensive afterschool programs designed
to prepare their children for exceptional scholastic achievement. For many parents, their
po

children’s academic achievement is a positive or negative reflection of their performance

as parents. Another niche market exists to serve those whose incomes allow for the search
for physical perfection; body modification businesses now offer plastic surgery, nutrition-
ists, and personal trainers to assist in shaping the body.
,
py

Society is divided into an almost unlimited number of segments based on any combi-
nation of demographic: gender, age, ethnicity, sexual orientation, income, marital status,
religious orientation, and the list goes on. Entrepreneurs can often identify market niches
co

among the nearly limitless combination of people in our society and create a business that
meets their needs and wants.

Demographic and Lifestyle Environment

t
no

Sociopolitical changes are closely aligned with demographic and lifestyle trends on a vari-
ety of levels. As discussed earlier, the demographics of the population change relatively
slowly. Trends such as birth rates provide a steady and accurate assessment of potential
market needs. For example, manufacturers and retailers of children’s clothing know, with
o

accuracy, how many children will be of a certain age next year as well as the gender of
those children. Parental disposable income can be projected based on economic data.
D

Housing trends would provide insight into where the parents and children live. In fact,
the U.S. Census data can provide extremely precise and detailed demographic, societal,
and economic information to guide the entrepreneur’s decision making.

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 62   Launching Successful Ventures

Lifestyle trends evolve at a faster pace. Some lifestyle trends begin in specific parts of the
country and are adapted by other regions or specific communities later. Some lifestyle trends
show signs of becoming permanent for a section of the population. An example would be
exercise and fitness. Insightful entrepreneurs recognized that some women were reluctant
to exercise around men due to cultural taboos, being offered unwanted male attention or

e
advice, or just plain awkward self-consciousness. Consequently, “women only” fitness cen-
ters are thriving, driven in part by the same lifestyle trend for health that fuels the vitamin

ut
and supplement industry. As of 2018, the fitness industry, which was practically nonexistent
40 years ago, now accounts for a market worth of more than $25 billion. Membership in a

rib
gym or health club in the United States has grown 33.6 percent since 2008, not to mention
the growth in health-related apps and wearable activity trackers.1
Demographic and lifestyle trends can be compared to a train. An entrepreneur must find

t
out early where the “trend train” is going and decide whether or not to get on board. It is

is
normally too late to get on board when the train has picked up speed and is roaring down
the track. However, by conducting proper research, entrepreneurs can get on board early and

d
position themselves to be at the train controls. Entrepreneurs who recognize and analyze
demographic and lifestyle trends early can position themselves to gain an ever-increasing
share of a growing market.

or
Creating Opportunities
t,
The process of determining the interactions among the components of the macroen-
vironment that will produce potential opportunities for a new business venture is not
s
complete until the entrepreneur assesses the probability of the occurrence of these
po

FIGURE 3.2  ■  From Macroenvironmental Analysis to Market Impacts

,
py

Interaction of Economic, Critical External Impact on

Sociopolitical, Technological, New Market Anticipated
Demographic, and Lifestyle Forces Forces Market(s)
co

ECONOMIC
OPPORTUNITIES
t
no

FORECASTED
DEMOGRAPHIC SOCIOPOLITICAL CHANGES
o
D

THREATS
TECHNOLOGICAL

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 Chapter 3  ■  Industry and Competitive Analysis   63

forces and the strength of the impact supporting the feasibility of the new venture. It
is essential to remember one thing at least. Just because the interactions of the mac-
roenvironmental forces create significant potential opportunities does not guarantee
that those opportunities fit the core competencies and resources of the entrepreneur’s
business. The entrepreneur benefits from making a detailed and painstaking evalua-

e
tion of all the relevant information regarding the nature and scope of the anticipated
opportunity. Only then can it be determined to be an accurate “fit” with the firm. If

ut
the anticipated opportunity has merit for the business, a plan of action needs to be
created and necessary resources allocated to move in an appropriate and timely man-

rib
ner. The goal is to place the firm at the “front end” of the new emerging market. The
creation of a new business model in line with an emerging trend can have a sweeping
impact on the market, sometimes creating entirely new niches. Figure 3.2 illustrates

t
how forces, trends, and events from the interactions of macroenvironmental compo-

is
nents can produce changes in the forces that drive markets and impact how business
operates. These forces can drive the creation of new opportunities or possibly create

d
threats to existing businesses.

or
STAGES OF INDUSTRY DEVELOPMENT
After gaining an understanding of the role macroenvironmental forces play in changing
t,
and reshaping markets through threatening some business models while creating oppor-
s
tunities for others, our next step is a detailed analysis and assessment of the competitive
behaviors of the industry offering a new opportunity. The first step in an industry assess-
po

ment is determining the basic nature of the industry in which the entrepreneur’s business
will need to compete. The size, scope, and maturity of the industry all generate character-
istics that need to be understood in depth.
,

Mature Industries
py

Mature industries are composed of established firms that have survived past battles.
As the name of these industries implies, they compete in already-developed markets, so
co

demand for their products and services may be slow, but it is steady, and often there is
little need for innovation if they are content with the status quo. New ventures can only
penetrate a mature market effectively through innovative products and services, those
that challenge that status quo. Entrepreneurs can expect aggressive competitive pressure
t
no

from existing firms with market positions that they need to defend. A second drawback
of competing against this type of industry is the possible difficulty of gaining initial
adoptions from customers who have established relationships with the current suppliers.
Entrepreneurial firms must ensure that they have the resources to survive a lengthy battle
o

in gaining a foothold in the market. The entrepreneur must have confidence in the new
product, must know that it is technologically sound and that its superiority and value
D

creation capability can be demonstrated

Mature industries are often comprised of customers who are reluctant to change from
established suppliers. Consumer products are equally well established in the minds of
buyers, and you may discover that market penetration can become a lengthy and costly
process. For some customers, there are deeply rooted psychological barriers that must be

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 64   Launching Successful Ventures

overcome before switching to a different seller, good, or service. When asked why they
don’t change, they will often say, “I always buy that product.”

Declining Industries
Declining industries are experiencing decreasing demand for their products or services.

e
Although the demand for these industries’ products or services may be in decline, there

ut
may be a few market niches experiencing growth. The entrepreneur will need to inves-
tigate very carefully to establish if this growth trend is short lived or has the potential
to continue to grow. In a few cases, new competitors might have innovative products or

rib
services that can gain market share through providing the market niche with a lower-cost
alternative.
Declining industries may have market components with the potential for rapid growth,

t
or they may offer opportunities that the existing competitors are not capable of servicing

is
or even willing to make the effort to serve. In this scenario, an innovative entrepreneur
with a fresh idea would experience limited competitor resistance. Competitors might

d
chose to leave the market due to their assessment that it is in steep decline, thinking
they would benefit by reallocating their efforts elsewhere. In other cases, an entrepreneur

or
might find a market niche large enough to be viable, even in a declining market, if he or
she is able to focus a product or service on the specific needs and wants of that unserved
or underserved niche. However, you should be aware of how the most aggressive firms
t,
in the industry are working to avoid the overall decline. These firms are striving to avoid
obsolescence by reinventing themselves with new products or services. Your goal is to
s
become their new supplier with products or services that meet their new needs.
po

Fragmented Industries
Fragmented industries are normally easy to enter because the industry is comprised
of firms of relatively equal size. There are no dominant competitors to oppose the entry
,

of the entrepreneur’s business, but there are equally no barriers to entry by other new
py

competitors. The potential opportunity may be in the introduction of a business model

that is so attractive that the firm can rapidly achieve a leadership position in the market
co

and erect barriers to potential “copycat” competitors. As an example, an entrepreneur

may create growth and market share through franchising. Outback Steakhouse, Olive
Garden, Hooters, and the Tilted Kilt have built national chains in the highly fragmented
restaurant industry.
t

The fragmented industry has what might be considered behavioral or operational

no

norm. The businesses in such an industry all operate with similar performance expec-
tations. A new business venture that can significantly exceed the standard norms of
behavior and operation can “stand out” from competitors. These businesses are able
to establish and maintain practices viewed by the market as superior to those of the
o

other competitors. The customers determine what the most important criteria are in
any market niche, but often it will be operational behaviors—such as superior quality,
D

honesty in all dealings, or friendly and courteous service—that enable your customers
to recognize your superiority. Delivery of the criteria important to customers will give
you the opportunity to grow your business rapidly. (This subject is investigated in depth
in the chapter on marketing.)

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 Chapter 3  ■  Industry and Competitive Analysis   65

Emerging Industries
Emerging industries are normally viewed as providing the best opportunities for new
ventures. When an entrepreneur has products or services that serve a previously unrec-
ognized or unmet customer need, these will face fewer established existing competitors.
In an ideal situation, the new venture achieves what is termed “first mover advantage” and

e
becomes recognized by the market niche as the firm best suited to meet these new needs.

ut
The analytical question to be studied is the demand stability of the market niche. Will
the niche continue to grow? Is the niche still evolving, and if so, to where and at what
pace? The greatest source for identifying emerging industries is almost always macroen-

rib
vironmental analysis, as discussed previously. New market niches can be traced directly
to the emergence of the trends produced by the interaction of the external environment.

t
Global Industries

is
Global industries are market niches that have common characteristics in multiple

d
nations. In most cases, some modifications of the firm’s products or services need to be
made to tailor these to the unique requirements of each potential market. At times, prod-
uct or service modifications may be superficial in nature. Opportunities for growth in

or
sales can occur rapidly through mastering strategies supportive of global market growth.
One of these, termed a multi-domestic strategy, emphasizes responsiveness to the local
requirements of multiple domestic markets, adapting products and services to fit these
t,
s
po

Uber
,

Launched in 2010 by Internet entrepreneur of Uber although its founder, Travis Kalanick,
py

Travis Kalanick, Uber has grown into a com- remains as a member of the company’s board
pany with one of the highest market valuations of directors. Khosrowshahi’s vision for contin-
in the world, with a valuation greater than Tesla, ued disruption in the transportation space has
co

Ford, or General Motors. In spite of internal now begun to take shape through the develop-
challenges, the company continues a trajec- ment and deployment of autonomous driving
tory of growth; 2016 gross bookings by users vehicles. Because of the company’s execution of
of the service exceeded $20 billion. Although its mission to decrease the costs for dispatched
t

reported 2016 net revenues exceeded $6.5 bil- taxis from central service providers, Uber had
no

lion, the company’s net losses were $2.8 billion. attained a market valuation of $62 billion by the
Dara Khosrowshahi has now become the CEO first quarter of 2018.

Sources:
o

Eric Newcomer, “Uber, Lifting Financial Veil, Says Sales Growth Outpaces Losses,” Bloomberg, April 14, 2017, https://www
.cnbc.com/2018/05/23/uber-q1-financial-data-increased-sales-valuation-with-new-tender-offer.html.
D

Jillian D’Onfro and Josh Lipton, “Uber Posts Big Sales Jump in First Quarter and Boosts Valuation to $62 Billion,” CNBC:
TECH, May 23, 2018, https://www.cnbc.com/2018/05/23/uber-q1-financial-data-increased-sales-valuation-with-new-
tender-offer.html.
“Leadership,” Uber website, https://www.uber.com/.

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 66   Launching Successful Ventures

markets. At the opposite end of the spectrum is a truly global strategy that sacrifices
responsiveness to local requirements in favor of efficiency and does not make too many
modifications of the firm’s products or services. Serving global industries can become
potentially complicated, whatever strategy a company follows. The entrepreneur must
factor in issues such as government laws and regulations, cultural differences, and eco-

e
nomic factors, for example, the customers’ ability to pay and the company’s ability to
force payment in a foreign country.

ut
rib
ANALYZING INDUSTRY BEHAVIOR
Porter’s Five Forces Model

t
Michael Porter of Harvard University developed the five forces model of competition.

is
This model is a powerful tool for assessing the anticipated level of competition that will
exist in an industry. Figure 3.3 illustrates this analytical method.2 Using the “five forces,”

d
an entrepreneur can evaluate the likelihood of a proposed venture surviving and prospering

or
FIGURE 3.3  ■  Five Forces Model
s t,
New
po

Entrants
,
py
co

Bargaining Bargaining
Industry
Power of Power of
Competitors
Suppliers Buyers
t
no
o

Substitute
Products or
D

Services

Source: Based on Michael E. Porter. “The Five competitive Forces That Shape Strategy,” Harvard Business
Review, January, 2008, pp.86–104.

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 Chapter 3  ■  Industry and Competitive Analysis   67

under a variety of difficult competitive situations. Each element of the model provides the
entrepreneur with a series of potential strategic challenges, which have the power to shape
the intensity of the rivalry that exists in the industry.
The threats experienced by new market entries are determined by economic factors
that include economies of scale and brand identity. Competitors who possess absolute

e
cost advantage, high capital requirements that restrict entry, and high switching costs, as
well as those with proprietary technologies and intellectual property, further inhibit the

ut
market entry of new firms. Each of these components is tangible and measurable. The
economics of the industry and the existence of established competitors who can exercise

rib
power to restrict entry into the industry need to be understood.
This analysis is far from theoretical. As an entrepreneur, you can evaluate any industry
that you are considering entering to determine objectively the nature of the competitive

t
forces you are likely to encounter. The conclusions you are able to reach based on your

is
assessment will serve to assist you in determining the potential of strategic success and
strategies for attaining it. Porter’s five forces model is a highly valued analytical tool for

d
the assessment of new venture success.

or
Impact of Suppliers
Suppliers have power to influence the competitive environment of a business when they
are highly concentrated and control potential access to needed components. In many
t,
cases, their economic power allows them to set prices. Suppliers have no motivation to
negotiate due to their ability to control product prices; therefore new ventures need to be
s
concerned about the stability of supply under conditions in which suppliers can artifi-
po

cially limit or withhold vital components. The new venture might not be able to purchase
needed critical components if it does not pay a supplier’s “asking price.” Suppliers will
normally demonstrate a preference for their larger and long-term customers. This prefer-
ence is a very serious issue that could be harmful to revenue and success.
,
py

Impact of Buyers
Buyers possess the power to negotiate lower prices when a new business venture needs
their orders to survive. Typically, buyers who make larger than normal purchases have
co

the capability to exercise strength in negotiating lower prices in the form of volume dis-
counts. Entrepreneurs quickly discover that their assumptions regarding their “proposed
product price” and associated profitability are proving to be unrealistic.
t

The negotiating power of larger buyers normally exists due to the economic reality
no

that it is less expensive to sell in high volume. New ventures will always be at a disadvan-
tage until they are on a more equal footing with the buyers. The new venture will have a
negotiating advantage when their products or services are uniquely superior to those of
competitors. A new venture can gain additional economic power when products possess
o

intellectual property protection, such as patents, copyrights, and trademarks.

D

Impact of Substitute Products or Services

Another component of the five forces model that impacts the intensity of competition
is the threat of substitute products or services. Competition is enhanced when the
industry players feel pressure from a potential competitor who is capable of offering

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 68   Launching Successful Ventures

products or services comparable to their own. The closer these substitutes are in price
and quality to those of the entrepreneur wanting to enter the industry, the greater the
competitive pressure.
Competitive pressure is one of the factors determining the profitability of an industry.
There is no logical reason to invest in a business venture that will operate in an industry

e
where competitive pressures produce unacceptable profits. The entrepreneur needs to search
for market niches that have less competitive pressures and the potential to achieve higher

ut
profit margins. Thus, entrepreneurs must evaluate the operational components of their busi-
ness models and the dynamics of the industries in which they are considering competing to

rib
determine if proposed ventures have the potential to meet their profitability expectations.

t
COMPETITIVE ANALYSES AND

is
COMPETITIVE PROFILE MATRICES

d
If the entrepreneur finds the characteristics of the industry to be favorable, the second
step is the evaluation of the competitors currently or potentially in the market niche the

or
business intends to enter. A detailed competitor analysis requires the collection of what is
described as competitive intelligence. Competitive intelligence focuses on gathering and
evaluating all of the information that can be learned about each competitor’s capabilities
t,
and behaviors. For publicly traded companies, there is an abundance of information
through such sources as these:
s
po

• Required SEC filings

• Competitors’ websites
• Third-person analyses of other firms
,
py

• Discussions with suppliers and vendors who serve the market niche
• Publications of the trade associations in which the companies are members
co

• Current customers of the competitors

• Industry conferences and trade shows, which are normally sponsored by the
relevant trade associations
t

• Speeches and reports by the executives of competitive firms

no

Much of this research is available through the assistance of a qualified research librar-
ian. There are many completely ethical sources of competitive intelligence. Entrepreneurs
have no reason to enter a market without conducting a modestly sophisticated analysis of
o

the competitors in the market.

D

Competitive Critical Factors

Competitive intelligence is not complex or even overly sophisticated. Competitive intel-
ligence involves the collection of critical information about the businesses with whom

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 Chapter 3  ■  Industry and Competitive Analysis   69

Lyft
Serial entrepreneurs Logan Green and John launch of services in Toronto. The company’s
Zimmer cofounded and launched Lyft in 2012 as cofounders, having grown a substantial, prof-

e
a logical outgrowth of their earlier ride-sharing itable business, have now turned their atten-
venture, Zimride, which was begun in 2007. tion to another disruptive business offering.

ut
Created in the disruptive space of on-demand Working in partnerships with General Motors,
personal transportation replacing traditional Ford, Waymo, and NuTonomy, Lyft has begun

rib
taxi and limousine services, Lyft has grown to the development of autonomous driving vehi-
provide over 1 million rides daily and expanded cles. Through the insightful and directed lead-
its business operations to include all 50 ership of its cofounders Green and Zimmer,
states in the United States. In 2017, the com- Lyft reached a market valuation of $7.5 billion

t
is
pany began its expansion into Canada with the in April 2017.

d
Sources:
Biz Carson, “Lyft Doubled Rides in 2017 as its Rival Stumbled,” Forbes, January 16, 2018, https://www.forbes.com/sites/
bizcarson/2018/01/16/lyft-doubled-rides-in-2017/.

or
See also the Lyft website and blog: https://www.lyft.com/ and https://blog.lyft.com.
Andrew J. Hawkins, “Ford and Lyft Will Work Together to Deploy Autonomous Cars,” The Verge, September 27, 2017, https://
www.theverge.com/2017/9/27/16373574/ford-lyft-self-driving-car-partnership-gm.
Eric Newcomer, “KKR Among Lyft Investors at $7.5 Billion Valuation for Startup,” Bloomberg, April 11, 2017, https://www
t,
.bloomberg.com/news/articles/2017-04-11/kkr-among-lyft-investors-at-7-5-billion-valuation-for-startup.
s
po

your new venture will compete. Ask yourself, these questions. What must I know about
each of these potential competitors? How can I structure my findings in order to reach
the most accurate conclusions about each competitor?
,

Researching the industry you are about to enter and your potential competitors in that
py

industry is just common sense. Why would any entrepreneur not be willing to conduct
this research and analysis prior to investing in a new business venture? Here are some
specific questions to help guide your research:
co

 1. What are the sources of any competitive advantages that the competitor
demonstrates in the market? Does the competitor possess a unique set of skills
and capabilities? Can these skill sets be legally replaced or replicated, and
t

at what cost?
no

 2. What strategies and tactics does the competitor demonstrate in the market
niche? What are their stated objectives?
o

 3. How has the competitor previously responded to significant market changes
created by the interactions of the macroenvironment? How effective have these
D

responses been?
 4. How has the competitor previously responded to new ventures attempting to
enter the market? Identify any strategies ranging from acquisition to other more
competitive behaviors.

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 70   Launching Successful Ventures

 5. Does the competitor have the resources to mount a vigorous defense of its
market position if a new entry challenges? What are these resources?
 6. Does the competitor have any weaknesses that make it vulnerable? What,
specifically, are these weaknesses?

e
 7. How are the competitor’s products or services positioned in the market in
comparison with those the entrepreneur intends to introduce?

ut
 8. How would you rate each competitor’s leadership?

rib
 9. Does the competitor have customers who are historically loyal to its products or
services? If so, who are they and what percentage of the competitor’s sales do these
customers represent? (Even long-term customers can have unfulfilled needs. If

t
you can cultivate clients from competitors based on your provision of innovative

is
solutions, testimonials from these customers about why your solution is better than
the status quo is a powerful marketing tool for any entrepreneurial start-up firm.)

d
10. Does the competitor have extremely loyal suppliers who might not be willing to
supply the entrepreneur’s firm if the competitor asked them not to?

or
11. How valuable to the competitor is the market niche that you wish to enter?
How vigorously will the competitor defend this market niche? How would you
t,
evaluate the “cost/benefit” of attempting to enter the market niche?
s
12. Based on what you have learned about the competitor, how vulnerable will your
new venture be to that competitor’s response to your market entry?
po

Based on a positive analytical result from the questions posed in the competitor intel-
ligence process, the entrepreneur must formulate a market entry strategy. The market
entry strategy needs to recognize those critical components of all the competitors’ prod-
,

ucts that generate superior performance. If the entrepreneur’s products are superior to
py

those of the competitors, the entrepreneur can compete on a “head-to-head” basis. Are
there shared core competencies among the current market leaders? Will the new business
co

venture be able to meet or exceed competitors on these capabilities? The new venture
will also need to possess these core competencies, unless the entrepreneur anticipates a
significant change in the market that will result in negating the importance of these core
competencies, thus creating the need to replace them with others.
t

Reflect on the discussion of the characteristics of an industry, and remember the

no

importance of many of the essential tangible and measurable conditions associated with
success. Some of these strategic components include a large amount of initial capital,
specialized equipment, and the achievement of economies of scale and operations, or
having proprietary technology. In some market niches, a new business venture will fail if
o

it ignores critical market realities.

D

Constructing a Competitive Profile Matrix

A competitive profile matrix needs to be constructed based on what the entrepreneur
learns from the competitive intelligence analysis. The competitive profile matrix focuses

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 Chapter 3  ■  Industry and Competitive Analysis   71

FIGURE 3.4  ■  Competitive Profile Matrix: An Example

Relative Your Venture’s Company Company Company

Critical Success Factor Weight Rating Score 1 2 3

Highly efficient  .30

e
low-cost production
Established and efficient  .20

ut
distribution system
Innovative products  .20

rib
Competitive prices  .10
High-quality product  .10

t
is
Loyal customers  .05
Excellence in management  .05

d
Total 1.00

or
on a critical set of factors, as well as on the relative impact of each factor on the achieve-
ment of success. This analytical tool allows for each firm to be rated and compared on all
of these specific factors critical to success in this market niche. Figure 3.4 provides an
t,
example of a competitive profile matrix.
s
If you apply evaluation process illustrated in Figure 3.4, the ratings for each critical
success factor could be a maximum of 4 if the firm has a major strength on the specific
po

success factor, of 3 if the firm has a minor strength, of 2 if the firm has a minor weak-
ness, and of 1 if the firm has a major weakness. The score for each firm is then calculated
according to the assigned relative weight of each factor. These weights are determined by
an assessment of each factor’s significance in impacting success in each targeted market
,

niche. In other words, the score you assigned to each of the critical success factors is mul-
py

tiplied by the factor weighting that was assigned to that specific factor. The maximum
score that a firm could earn in the example given in Figure 3.4 is a 4.0, as the sum of the
relative weighting numbers is 1.0.
co

The competitive profile matrix is just one additional analytical tool to assist the entrepre-
neur in the task of assessing the feasibility of a proposed new venture. The entrepreneur can
determine the probability of success for the new venture in the targeted market niche based
t

on a side-by-side comparison of competitors and can further the likelihood of this success
no

by recognizing and employing the critical factors needed to flourish in that market niche.

Value Chain Analysis

o

Another analytical tool that sheds light on the viability of a business model is a very simplified
version of value chain analysis. The focus of value chain analysis for an entrepreneurial firm
D

needs to be on the relative cost advantages or disadvantages a new venture could encounter.
A new venture’s relative cost in comparison to that of competitors affects the firm’s profit
margin. In most markets, all firms have a similar value chain that is comprised of all the
activities necessary to produce and deliver what it is selling and to service the customer base.

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 72   Launching Successful Ventures

FIGURE 3.5  ■  Value Chain Analysis

Total Sales Revenue 100%

Cost of All Supplies 10%

Cost of Production 40%

e
Cost of Marketing and Distribution 25%

ut
Customer Service Cost 10%

rib
Overhead Cost 10%

Total Cost 95%

Net Profit  5%

t
is
Components of the value chain would normally include the cost of all supplies, produc-

d
tion costs, marketing and distribution costs, customer service expenses, and all overhead
expenses. Profitability is based on sales revenues that exceed the total cost that is incurred

or
in creating and delivering the firms product or services. Figure 3.5 is a simple illustration of
the value chain; percentages have replaced actual dollars for the purpose of this illustration.
The objective of value chain analysis is to identify expenses and costs that can be
t,
reduced, resulting in a higher net profit. As an example, if a new venture possesses unique
competencies that result in producing a product at an equal or higher quality than is
s
standard but at a significantly lower cost, these superior production techniques, skills,
po

or capabilities result in operating proficiencies that lower production cost and simultane-
ously increase the firm’s profits.
Sometimes, firms lower costs by outsourcing noncore organizational functions, espe-
cially in the area of overhead items, to firms whose superior competencies in these areas
,

allow the outsourcer to lower the entrepreneur’s total cost and increase the firm’s profits.
py

An example might be a publisher outsourcing shipping and distribution. The entrepre-

neur should always be searching for a core competency that the new venture can create, as
these can produce a competitive advantage. If the firm’s core competencies are extremely
co

difficult or impossible for competitors to duplicate, the new venture has the foundation
for a lasting, sustainable competitive advantage.

Benchmarking
t
no

Another useful analytical tool used to determine whether a firm’s value chain activities
are competitive in comparison to those of its rivals is benchmarking. The benchmarking
process entails attempting to measure the actual cost and efficiency of each component
in the value chain in an attempt to identify specific superior actions or tactics, which
o

are then termed best practices. Benchmarking involves the entrepreneur using the same
sources of information employed in the competitive intelligence process. Competition
D

requires that every firm continually search for improved operational technologies and
methods that will achieve lower cost, superior performance, or both.
When entrepreneurs conduct value chain analysis and benchmarking prior to enter-
ing a market, they might be able to determine that the unique capabilities and core

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 Chapter 3  ■  Industry and Competitive Analysis   73

ENTREPRENEURIAL SPOTLIGHT
MIKE LINDELL—MYPILLOW

e
Mike Lindell is a highly successful entrepreneur family home to obtain enough funding to continue.
who has traveled a difficult path on his way to The product, MyPillow, is the result of 90 dif-

ut
success. Mike was a heavy drug user before ferent trials before it satisfied the founder.
turning his life around. Today, you cannot watch Actually, Lindell went on to invent the machine
television without seeing one of his commer- that automatically fills his pillows. In 2011, the

rib
cials for MyPillow. Lindell developed his prod- Minneapolis Star Tribune published a feature
uct in 2000. He sold his product at trade shows article on Mike Lindell and MyPillow, resulting
and state fairs. Above all, Lindell and his family in a surge of sales. He expanded his advertising

t
believed deeply in the product, and his confi- from print media to the infomercials now shown

is
dence in it motivated his drive to succeed. As an nationwide.
example, he ordered 30,000 plastic bags with the The bottom line: MyPillow today has sales of

d
company logo printed on each before the final over $280 million, and it had sold more than 26
prototype was completed. million pillows by early January 2017. The firm
Cash flow was an issue, as most start-up employed over 1,400 people in its home state of

or
firms discover. In response, he mortgaged the Minnesota in the spring of 2017.

Sources:

documentary, 59 min.
s t,
The Mike Lindell Story—An American Dream, directed by Joe Brandmeier (New York and Los Angeles: LightBeaMedia, 2016),

Patrick Kennedy, “MyPillow Lays Off 140 Workers Because of Slower Sales,” Minneapolis Start Tribune, April 25, 2017,
http://www.startribune.com/mypillow-lays-off-140-workers-because-of-slower-sales/420422463/.
po

Josh Dean, “The Preposterous Success Story of America’s Pillow King,” Bloomberg Businessweek, January 11, 2017,
https://www.bloomberg.com/businessweek.
,
py

competencies their firms possess will allow them to achieve an early competitive foothold.
A firm’s core competencies—those that apply to performance and the firm’s markets—
are the foundation upon which its competitive strategies and tactics need to be based.
co

CREATING YOUR BUSINESS MODEL

t
no

In the previous chapter and in this one, we have addressed the critical issues of the
birth of an idea for a new product or service; the application of creativity and innova-
tion; the analytical evaluation of an idea to determine if it is a viable opportunity; the
assessment of the opportunities created by the interactions of the components of the
o

macroenvironment; the assessment of the industry in which a new product or service

might compete; the competitive behaviors of industries; and, finally, the assessment
D

of competitors. Now the entrepreneur must create a business model based upon the
results of this comprehensive analysis. The new venture’s business model will be based
on the findings from all of the analyses. The business model needs to be unique and
not simply a copy of a competitor’s model. Any venture’s business model needs to be

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 74   Launching Successful Ventures

deeply rooted in the basic values and vision of that venture, as well as in its unique
competencies and resources. The business model illustrates how the entrepreneur
plans to enter the selected market niche after having assessed an amalgamation of its
competitive components. Once the business model is established, the entrepreneur
then formulates core business strategies. These strategies are themselves based on the

e
analysis that has been previously completed. Effective business strategies address the
characteristics and behavior of the targeted market niche, as well as assessments of

ut
the strategies and weaknesses of competitors. The critical and tangible components of
market dynamics are the building blocks of strategy. The strategies of the entrepre-

rib
neurial firm must be sufficient to meet the needs of the market customers in a superior
fashion to that of the firm’s competitors.

t
The Value of Strategic Thinking

is
Strategic thinking gives rise to how the entrepreneur’s new venture will choose to com-
pete. Strategic thinking requires the ability to understand all aspects of the competitive

d
landscape. Thinking strategically helps entrepreneurs avoid becoming myopic and short-
sighted, and it is the mental foundation upon which the firm’s strategic planning process

or
is developed. The resulting strategic plan is used to integrate all components of the firm.
Creating an effective business plan begins with the development of a clear vision for the
business and the translation of that vision into the final mission statement. A mission
t,
statement addresses a series of essential questions, including the following:
s
1. What are the basic beliefs and values of the new business venture?
po

2. What are the products and services the firm plans to offer?
3. What are the purchasing characteristics of the specific targeted customers?
4. What are the specific needs and wants of the targeted customers that our product
,
py

or services must satisfy?

5. How do our products or services meet or exceed the expectations of our targeted
customer base?
co

6. How, specifically, does our product or service create value for the targeted
customers?
t

Applying Critical Driving Forces

no

The firm’s mission statement makes crystal clear what the business is and what market
niches it is focused on. The mission statement also enables entrepreneurs to recognize and
describe what are termed the critical driving forces of the new venture. Here are two
o

examples of critical driving forces:

D

1. Unique or superior knowledge upon which the firm’s products or services are based.
2. Detailed knowledge of the markets, customers, and their buying behaviors.

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 Chapter 3  ■  Industry and Competitive Analysis   75

These driving forces serve to keep the entrepreneur focused on where the new venture
has a competitive advantage, so this step serves to help and establish the scope of the
business.
To ensure that the new venture maximizes its strengths and avoid its weaknesses,
the entrepreneur develops an internal factor evaluation matrix. This analytical tool

e
allows for a focus on the firm’s strengths that have the potential for the greatest impact
on achieving successful market penetration and potential profitability. With the specific

ut
market niche in focus, what are the most critical strengths that must be present within
the new business venture to achieve success? The internal factor evaluation matrix begins

rib
with the firm’s key internal strengths and weighs the relative importance of each in the
achievement of success.

t
Business Strategies

is
The entrepreneur has already developed a competitive profile matrix, which is revisited
during the process of developing a business strategy in order to identify clearly each

d
competitor’s areas of weakness. Business strategies are normally most effective when
they are focused on competitors’ weaknesses. These strategies serve to lay out a roadmap

or
that guides a firm to achieve its objectives. Effective business strategies are firmly rooted
in the specific and highly focused application of the firm’s unique core competencies
to meet the measurable needs and wants of the targeted market niche the entrepreneur
t,
wants to penetrate. Distinctive market-focused competencies, then, are the foundation
of the firm’s success. A successful business strategy is comprehensive and integrates all
s
of the firm’s core competencies to focus on the key factors necessary for success in the
po

market as the “point” of the competitive spear.

For new business ventures, the most effective business strategies are normally a combi-
nation of what are termed focus and differentiation strategies. The focused component of
the firm’s strategy is a recognition that the firm is attempting to gain initial penetration
,

in a specific and possibly limited market niche. The differentiation component recognizes
py

that successful market penetration requires that the product or service have unique capa-
bilities that are superior to those of its competitors.
A focus strategy recognizes that not all markets are homogeneous. In any large mar-
co

ket, there are normally many different segments or niches—each with different needs,
wants, and characteristics. A focus strategy, as the name suggest, identifies the customers
special needs, wants, and interest while offering them goods and services that meet or
exceed these unique needs and wants. The products or services create value for a specific
t

market niche. The differentiation strategy seeks to build customer loyalty by creating
no

and distributing products and services that are unique. The differentiation strategy
attempts to create superior value for the customer through making modifications in the
product or service that result in valued uniqueness. One key to a successful differentiation
strategy is that it is built on a distinctive competency of the firm. Also, the product or
o

service differentiation must actually create value in the eyes of the customer, and cus-
D

tomers must actually be able to afford to purchase the differentiated product or service.
Typically, an entrepreneur can differentiate market offerings through producing a prod-
uct or service that is of higher quality, has unique and valued features, or is more reliable

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 76   Launching Successful Ventures

and dependable. Another avenue to differentiation is for the firm to provide superior
customer service.
To conclude, we have discovered that entrepreneurs research the market both to iden-
tify market niches in which their products or services will be successful and to develop
strategies that best present their firms to those unique markets. This is the essence of the

e
firm’s business model. The business model is tangible and based on the firm’s unique dis-
tinctive competencies that are capable of producing value for the market the firm serves.

ut
In a competitive world, the firm needs to have a business model that clearly communi-
cates its uniqueness and value creation to its targeted market niches.

t rib
d is
or
s t,
, po
py
t co
no
o
D

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 Chapter 3  ■  Industry and Competitive Analysis   77

ENTREPRENEURIAL EXERCISES
The remainder of this chapter encourages you to complete exercises that allow you to apply the material
in the chapter to a proposed business venture of your choosing. These practical exercises will help you

e
determine whether your proposed business venture may prove to be a winner.

ut
Entrepreneurial Exercise 3.1

rib
Part 1
Please describe in detail the interactions of the macroenvironment that you believe will take place over
the next five (5) years and what opportunities you believe these interactions will create during that time.

t
Major macroenvironmental forces, trends, and events that you believe will occur over the next five

is
years include the following:

d
1.

or
2.

3. t,
s
4.
po

5.
,

Based on these predictions what do you see as potential opportunities?

py

1. New opportunity:
co

2. New opportunity:
t

3. New opportunity:
no

4. New opportunity:
o

Part 2
D

How do the new opportunities that you identified in Part 1 impact your proposed new business venture?

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 78   Launching Successful Ventures

Entrepreneurial Exercise 3.2

Part 1
Please describe how cross impact analysis of the components of the macroenvironment and of their inter-

e
actions has resulted in your identification of significant changes in market opportunities.

ut
rib
Part 2
Have the results of cross impact analysis and your consequent assessment of market changes affected

t
your proposed business venture? If so, how? If not, why not?

d is
Environmental Exercise 3.3

or
What are the primary research tools and measures that you plan to employ in scanning components of the
macroenvironment?

1. Economic environment:
s t,
po

2. Technological environment:
,
py

3. Sociopolitical environment:
co

4. Demographic and lifestyle environment:

t
no

Entrepreneurial Exercise 3.4

o

Part 1
D

What is the industry or industry segment in which your proposed new business venture plans to compete?
Please describe it in as much detail as possible.

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 Chapter 3  ■  Industry and Competitive Analysis   79

Part 2
Using Michael Porter’s five forces model guides the entrepreneur toward a measure of the competitive
intensity of a proposed market. Please use this model to evaluate the anticipated competitive intensity in
the industry or industry segment in which your business venture plans to operate.

e
1. New entry of competitors:

ut
rib
2. Bargaining power of buyers:

t
is
3. Substitute products or services:

d
4. Bargaining power of suppliers:

or
Part 3
s t,
List and describe the favorable and unfavorable characteristics of the industry.
po

Favorable Unfavorable

1. 1.
,
py

2. 2.
co

3. 3.

4. 4.
t
no

5. 5.
o
D

Entrepreneurial Exercise 3.5

Based on a competitive analysis of the industry segment or segments in which you plan to compete, con-
duct an analysis of the three major competitors your research has identified. Please use the format below
for each of the three competitors:

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 80   Launching Successful Ventures

Part 1
Competitor:

Estimated market share:

e
Competitor’s nature:

ut
Sources of competitor’s advantages:
1.

rib
2.
3.

t
is
Competitor’s strategies:
1. 

d
2. 

or
3. 

Competitor’s historic ability to respond to changes in the market niche:

1.  t,
2. 
s
3. 
po

Competitor’s historic ability to respond effectively to new market entries:

1. 
,

2. 
py

3. 

Competitor’s resources that will allow it to respond effectively to new competitors:

co

1. 
2. 
3. 
t
no

Competitor’s weaknesses that might be exploited by a new market competitor:

1. 
2. 
o

3. 
D

Quality of the competitor’s leadership (please describe):

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 Chapter 3  ■  Industry and Competitive Analysis   81

Competitor’s top three existing customers based on their loyalty to the competitor:

1. 

e
2. 

ut
3.

rib
Entrepreneurial Exercise 3.6
Competitive profile matrix: please create a competitive profile matrix similar to that illustrated in
Figure 3.4, and compare your proposed new business venture with your top three competitors, which

t
you identified in Exercise 3.5.

d is
or
s t,
po

Entrepreneurial Exercise 3.7

,
py

Internal factor evaluation matrix: please create an internal factor evaluation matrix for your proposed new
business venture. Make sure the matrix allows for an assessment of your firm’s key internal factors, those
that will contribute to success.
t co
no
o
D

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 82   Launching Successful Ventures

Entrepreneurial Exercise 3.8

In this exercise, you will create your new business venture’s business model.

Part 1

e
Describe in detail the business model for your new proposed business venture.

ut
t rib
d is
Part 2
How have you incorporated your values and beliefs into your proposed firm’s vision and its mission

or
statement?

s t,
po

Part 3
,

At this point in the evaluation of your proposed new business venture, how confident are you of the firm’s
py

success?
t co
no

Part 4
Do you have any reservations about your proposed firm’s success? If so, what are they? If not, why not?
o
D

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