042 ENTREPRENEURSHIP
Brunswick High School
Study Guide (Chapter 5), Definition, and Notes
Topic : Analyzing the Industry with an effective analysis
Unit 5 Industry Analysis
Accessible - can you get into the industry
Ripe and Innovation
Negative Attribute
Firm - Level Factor - product
Industry - Level Factors - New entrants, rivalry among existing firms, bargaining
power of buyers.
Conclusion
Assessing Industry Attractiveness
- Study Environmental and Business Trends
Studying Industry Trends
Environmental Trends - Industries that sell products to seniors are benefiting by
the aging of the population
Business Trends - profit margins, increasing or falling?
~The Five Competitive Forces Model~
A model is a framework for understanding the structure of the industry
Threat of Substitutes - The price that consumers are willing to pay for a product
depends in part on the availability of substitutes products. EX: prescription
medicine / other competitive companies with the same products, diverse way of
selling or etc. Suppress the profitability
Threat New Entrants - a firm in a new industry is highly profitable, the industry
becomes a magnet to a new entrant. Erecting barriers to entry basically illegally
or try to take down someone's company. Ex: soft drink industry. Capital
Requirement to invest in large amounts. Government and legal barriers.
Non traditional Barrier to Entry - assembling a world class management team.
Unique business model, Inventing a new approach to all industries.
Rivalry among existing Firms - The major determinants of industry profitability is
the level of competition amongst existing firms. Number of competitors, Degree of
dierentiation, growth rate of an industry, level of fixed cost.
