Industry Analysis Questions

1. Explain the purpose of an industry

analysis.

Industry analysis helps businesses

understand the competitive dynamics of the
market in which they operate. It provides
insights into industry trends, competitive
forces, and potential profitability, enabling
businesses to develop strategies that
leverage their strengths and mitigate their
weaknesses. This analysis helps identify
opportunities and threats, making it easier
to make informed strategic decisions.

2. Identify the five competitive forces that

determine industry profitability.
Michael Porter’s Five Forces model
identifies the five competitive forces that
influence industry profitability:

- **Threat of New Entrants:** The ease or

difficulty with which new competitors can
enter the industry.
- **Bargaining Power of Suppliers:** The
ability of suppliers to influence the prices
and terms of supply.
- **Bargaining Power of Buyers:** The
influence customers have on prices and
terms of purchase.
- **Threat of Substitute Products or
Services:** The likelihood that customers
will switch to alternative products or
services.
- **Rivalry Among Existing Competitors:**
The intensity of competition among current
industry players.
3. Explain the role of “barriers to entry” in
creating disincentives for firms to enter an
industry.

Barriers to entry are obstacles that make it

difficult for new firms to enter an industry.
They include factors like high capital
requirements, strong brand loyalty among
existing customers, economies of scale,
access to distribution channels, and
regulatory requirements. These barriers
protect established firms by limiting
competition and potential market share
erosion, thereby maintaining profitability.

4. Identify the nontraditional barriers to

entry that are especially associated with
entrepreneurial firms.
Entrepreneurial firms often face
nontraditional barriers to entry, such as:

- Innovative Business Models:Unique

approaches to serving customer needs that
are difficult for competitors to replicate.
- **First-Mover Advantage:** Establishing a
strong market position by being the first to
market with a new product or service.
- **Unique Resources:** Access to
proprietary technology, patents, or unique
resources that competitors cannot easily
obtain.
- **Customer Loyalty:** Cultivating strong
relationships with customers through
personalized service or unique value
propositions.

5. List the four industry-related questions to

ask before pursuing the idea for a firm.
Before pursuing a business idea,
entrepreneurs should consider the following
industry-related questions:

- What is the current state of the industry,

and what are its growth prospects?
- What are the key success factors for firms
in this industry?
- What are the major threats and
opportunities facing this industry?
- Who are the main competitors, and what
are their strengths and weaknesses?

6. Identify the five primary industry types

and the opportunities they offer.

- **Emerging Industries:** Characterized by

new products or services with high growth
potential and opportunities for innovation.
- **Fragmented Industries:** Composed of
many small and medium-sized companies,
offering opportunities for consolidation and
differentiation.
- Mature Industries: Characterized by slow
growth, providing opportunities for process
innovation and efficiency improvements.
- **Declining Industries:** Facing reduced
demand, offering opportunities for niche
strategies or cost leadership.
- **Global Industries:** Operating in
international markets, presenting
opportunities for global expansion and
diversification.

7. Explain the purpose of a competitor

analysis.

Competitor analysis helps firms understand

their competitors' strategies, strengths, and
weaknesses. It enables businesses to
identify gaps in the market, anticipate
competitor actions, and develop strategies
to achieve a competitive advantage. By
understanding competitors' behaviors, firms
can position themselves effectively and
respond to market changes proactively.

8. Identify the three groups of competitors a

new firm will face.

- **Direct Competitors:** Firms offering

identical or similar products or services.
- **Indirect Competitors:** Companies
providing alternative solutions that meet the
same customer needs.
- **Future Competitors:** Potential new
entrants that could enter the market and
become competitors.
9. Describe ways a firm can ethically obtain
information about its competitors.

Firms can ethically gather competitive

intelligence by:

- Analyzing publicly available financial

reports and press releases.
- Monitoring competitors’ websites and
social media channels.
- Attending industry conferences and trade
shows to gather insights.
- Conducting customer surveys and
interviews to understand market
perceptions.
- Networking with industry insiders and
analysts for expert opinions.

**10. Describe the reasons for completing a

competitive analysis grid.**
A competitive analysis grid helps
businesses visually compare themselves
against competitors across various factors,
such as pricing, product features, market
share, and customer satisfaction. It aids in
identifying strengths and weaknesses,
spotting opportunities for differentiation, and
developing strategies to improve market
positioning. The grid serves as a strategic
tool for making informed decisions and
tracking competitive performance over time.

Idea Generation and Opportunity

Identification Questions

1. Explain why it’s important to start a new

firm when its “window of opportunity” is
open.
The “window of opportunity” refers to the
optimal time frame when a market or
technological gap exists that allows a new
business to enter and establish itself before
competitors can react. Starting a firm during
this period maximizes the chances of
gaining market share, achieving first-mover
advantages, and capitalizing on unmet
customer needs.

2. Explain the difference between an

opportunity and an idea.

An *idea* is a conceptual thought or

suggestion for a potential product or
service, whereas an *opportunity* is an idea
that has been evaluated and validated as
viable and potentially profitable in the
market. Opportunities are actionable, with a
clear path to implementation and potential
to meet market needs.

3. Describe the three general approaches

entrepreneurs use to identify opportunities.

- **Observing Trends:** Analyzing changes

in demographics, technology, and
consumer behavior to identify emerging
needs.
- **Solving Problems:** Identifying pain
points or inefficiencies in the market and
developing solutions.
- **Finding Gaps in the Market:**
Recognizing unmet needs or underserved
customer segments that existing
businesses are not addressing.
4. Identify the four environmental trends
that are most instrumental in creating
business opportunities.*

- Economic Trends: Changes in income

levels, employment rates, and economic
growth can create demand for new
products and services.
- **Social Trends:** Shifts in demographics,
lifestyles, and cultural norms can lead to
new market opportunities.
- **Technological Trends:** Advances in
technology can create opportunities for
innovation and new business models.
- **Political and Regulatory Trends:**
Changes in laws, regulations, and
government policies can open up new
markets or necessitate new solutions.
**5. List the personal characteristics that
make some people better at recognizing
business opportunities than others.**

- **Creativity:** The ability to generate novel

ideas and think outside the box.
- **Curiosity:** A strong desire to learn and
explore new concepts and markets.
- **Resourcefulness:** The ability to find
innovative solutions to challenges and
constraints.
- **Risk Tolerance:** Willingness to take
calculated risks and embrace uncertainty.
- **Vision:** The ability to envision future
possibilities and trends.

6. Identify the five steps in the creative

process.
1. **Preparation:** Gathering information
and resources relevant to the problem or
opportunity.
2. **Incubation:** Letting ideas marinate
subconsciously without active thought.
3. **Insight:** Experiencing a breakthrough
or “aha” moment where a solution becomes
clear.
4. **Evaluation:** Assessing the feasibility
and potential impact of the idea.
5. **Implementation:** Turning the idea into
a tangible product or service.

7. Describe the purpose of brainstorming

and its use as an idea generator.

Brainstorming is a collaborative technique

used to generate a wide range of ideas in a
short period. It encourages free thinking,
creativity, and the sharing of diverse
perspectives without judgment. The goal is
to generate as many ideas as possible,
which can then be refined and evaluated to
identify viable opportunities.

8. Describe how to use library and Internet

research to generate new business ideas.

- **Library Research:** Access academic

journals, industry reports, and market
studies to identify trends and gaps.
- **Internet Research:** Utilize online
databases, news sites, and social media
platforms to gather real-time insights and
track emerging consumer needs.
- **Competitor Analysis:** Examine
competitors' products, customer feedback,
and market positioning to identify areas for
improvement or differentiation.
9. Explain the purpose of maintaining an
idea bank.

An idea bank is a repository for storing and

organizing ideas that can be revisited and
refined over time. It serves as a valuable
resource for entrepreneurs to capture
spontaneous thoughts, explore connections
between ideas, and prioritize concepts
based on feasibility and potential impact.
Maintaining an idea bank ensures that good
ideas are not forgotten and can be
developed further when the time is right.

10. Describe three steps for protecting

ideas from being lost or stolen.

1. **Document and Date Ideas:** Keep

detailed records of ideas, including creation
dates, to establish ownership.
2. **Confidentiality Agreements:** Use
non-disclosure agreements (NDAs) when
sharing ideas with potential partners,
employees, or investors.
3. **Intellectual Property Protection:** Apply
for patents, trademarks, or copyrights to
legally protect innovative ideas and
creations from unauthorized use.

Business Modeling Questions

1. Describe a Business Model.

A business model describes how a

company creates, delivers, and captures
value. It outlines the company's value
proposition, target customers, distribution
channels, customer relationships, revenue
streams, key resources, key activities, key
partnerships, and cost structure. A
well-defined business model serves as a
blueprint for how a business operates and
makes money, ensuring that all aspects of
the business are aligned and working
towards the same goals.

2. Explain Business Model Innovation.

Business model innovation involves

making fundamental changes to the
traditional way a company does business.
This can include developing new products
or services, entering new markets, altering
the revenue model, or adopting new
technologies. Business model innovation is
crucial for staying competitive in rapidly
changing markets, as it allows companies
to adapt to new customer needs, emerging
trends, and technological advancements.
3. Discuss the Importance of Having a
Clearly Articulated Business Model.

A clearly articulated business model is

vital for several reasons:

- **Guidance:** It provides a roadmap for

decision-making and strategic planning.
- **Communication:** It helps
communicate the company's value
proposition to stakeholders, including
investors, employees, and partners.
- **Alignment:** It ensures all parts of the
business are working towards the same
goals, improving efficiency and
effectiveness.
- **Risk Management:** It helps identify
potential risks and challenges, allowing the
company to address them proactively.
4. Discuss the Concept of the Value Chain.

The value chain is a concept introduced

by Michael Porter, which describes the full
range of activities required to bring a
product or service from conception to
delivery and beyond. It includes primary
activities such as inbound logistics,
operations, outbound logistics, marketing
and sales, and service, as well as support
activities like procurement, technology
development, human resource
management, and infrastructure. Analyzing
the value chain helps businesses identify
areas where they can create value, reduce
costs, or gain a competitive advantage.

5. Identify a Business Model’s Two Potential

Fatal Flaws.
 - **Lack of a Clear Value Proposition:** If
a business model does not clearly define
the unique value it offers to customers, it
can struggle to attract and retain
customers.
- **Unviable Revenue Model:** If the
revenue model is not sustainable or
scalable, the business may fail to generate
sufficient profits to survive and grow.

6. Identify a Business Model’s Four Major

Components.

- **Value Proposition:** The unique value

or benefit the business offers to its
customers.
- **Revenue Model:** The strategy for
generating income, including pricing, sales,
and distribution.
 - **Customer Segments:** The specific
groups of people or organizations the
business aims to serve.
- **Infrastructure:** The key resources,
activities, and partnerships required to
deliver the value proposition.

7. Explain the Meaning of the Term

Business Concept Blind Spot.

A business concept blind spot refers to an

oversight or lack of awareness of certain
critical aspects of a business's environment
or operations. This can include ignoring
emerging trends, undervaluing competitors,
or misunderstanding customer needs.
These blind spots can hinder a company's
ability to adapt and innovate, potentially
leading to strategic missteps.
8. Define the Term Core Competency and
Describe Its Importance.

Core competencies are the unique

capabilities and strengths that give a
company a competitive advantage. They
are the skills, technologies, or resources
that differentiate a company from its
competitors. Core competencies are
important because they are difficult to
replicate, provide significant value to
customers, and are key drivers of the
company's success.

9. Explain the Concept of Supply Chain

Management.

Supply chain management (SCM)

involves coordinating and optimizing all
activities involved in the production and
delivery of goods and services. This
includes managing relationships with
suppliers, manufacturers, distributors, and
retailers to ensure products are delivered
efficiently, cost-effectively, and with high
quality. Effective SCM improves customer
satisfaction, reduces costs, and enhances
the overall competitiveness of a business.

10. Explain the Concept of Fulfillment and

Support.

Fulfillment refers to the process of

completing customer orders and delivering
products or services to them. This includes
warehousing, inventory management, order
processing, packaging, and shipping.
Support involves post-sale activities such
as customer service, technical support, and
warranty services. Together, fulfillment and
support are crucial for ensuring customer
satisfaction and loyalty, as they directly
impact the customer experience.

Financing Questions

1. Explain Why Most Entrepreneurial

Ventures Need to Raise Money During
Their Early Life.

Most entrepreneurial ventures need to

raise money during their early stages to
cover startup costs, such as product
development, marketing, staffing, and
operational expenses. Initial funding helps
entrepreneurs establish their businesses,
bring products to market, and achieve early
milestones. This financial support is
essential to sustain the business until it
becomes profitable.
2. Identify the Three Sources of Personal
Financing Available to Entrepreneurs.

- **Personal Savings:** Entrepreneurs

often use their own savings to fund their
business ventures, providing them with
initial capital without incurring debt.
- **Friends and Family:** Many
entrepreneurs turn to friends and family for
financial support, leveraging personal
relationships to secure funding.
- **Personal Credit:** Entrepreneurs may
use personal credit cards or loans to
finance their business, though this involves
taking on personal financial risk.

3. Provide Examples of How Entrepreneurs

Bootstrap to Raise Money or Cut Costs.
 - *Minimizing Expenses:* Entrepreneurs
can cut costs by operating from a home
office, using shared workspaces, or
negotiating better terms with suppliers.
- **Leveraging Free Resources:** Utilizing
free or low-cost software and online tools
can help reduce overhead costs.
- **Generating Early Revenue:** Offering
pre-orders, securing early contracts, or
providing consulting services can generate
initial cash flow.

4. Identify the Three Steps Involved in

Properly Preparing to Raise Debt or Equity
Financing.

- **Business Plan Preparation:** Develop

a comprehensive business plan that
outlines the company's strategy, market
opportunity, financial projections, and
funding needs.
- **Financial Projections:** Prepare
detailed financial forecasts, including
income statements, cash flow projections,
and balance sheets.
- **Investor or Lender Identification:**
Research and identify potential investors or
lenders that align with the company's goals
and values.

5. Discuss the Difference Between Equity

Funding and Debt Financing.

- **Equity Funding:** Involves raising

capital by selling shares of the company to
investors. Investors gain ownership stakes
and may receive dividends or profit-sharing.
Equity funding does not require repayment
but may dilute ownership and control.
 - **Debt Financing:** Involves borrowing
money that must be repaid with interest.
Lenders do not gain ownership stakes, but
the business is obligated to make regular
payments regardless of profitability.

6. Explain the Role of an Elevator Speech

in Attracting Financing for an
Entrepreneurial Venture.

An elevator speech is a concise,

persuasive pitch that summarizes the
business idea, value proposition, and goals
in a short amount of time, typically 30 to 60
seconds. It is used to capture the interest of
potential investors or partners, providing
enough information to generate curiosity
and prompt further discussion.
7. Describe the Difference Between a
Business Angel and a Venture Capitalist.

- **Business Angel:** An individual

investor who provides capital to startups in
exchange for equity, often taking an active
role in mentoring and advising the
company.
- **Venture Capitalist:** A professional
investor or firm that provides capital to
high-growth startups in exchange for equity,
typically at later stages. Venture capitalists
focus on achieving high returns and may
have stricter investment criteria.

8. Explain Why an Initial Public Offering

(IPO) Is an Important Milestone in an
Entrepreneurial Venture.
 An IPO is the process of offering shares
of a private company to the public through a
stock exchange. It is an important milestone
because it provides significant capital for
expansion, enhances the company's public
profile, and offers liquidity to early investors
and founders. An IPO can also validate the
company's success and increase its
credibility in the market.

9. Discuss the SBA Guaranteed Loan

Program.

The Small Business Administration (SBA)

Guaranteed Loan Program provides
guarantees to lenders for loans made to
small businesses. This reduces the risk for
lenders and makes it easier for small
businesses to obtain financing. The
program offers various loan types, including
7(a) loans for general purposes and 504
loans for real estate and equipment
purchases.

10. Explain the Advantages of Leasing for

an Entrepreneurial Venture.

Leasing offers several advantages for

entrepreneurial ventures:

- **Preservation of Capital:** Leasing

allows businesses to use assets without
large upfront costs, preserving cash for
other needs.
- **Flexibility:** Leasing provides
flexibility to upgrade or change equipment
as needed without long-term commitments.
- **Tax Benefits:** Lease payments may
be tax-deductible as business expenses,
reducing the overall tax burden.
 - **Reduced Risk:** Leasing reduces the
risk of asset obsolescence, as businesses
can easily upgrade to newer technologies.
.