Entrepreneurship ‫تشبثات‬

Total Quality Management

Shoaib
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 ‫تشبثات ‪Entrepreneurship‬‬

‫د لوړو زده کړو وزارت‬

‫کنــــــدهار پوهنتون‬
‫اقتصاد پوهنځی‬
‫انټرپرونیورشیپ څانګه‬

‫تشبثاتو مدیریت‬
‫‪Entrepreneurship Management‬‬

‫استاد ‪ :‬ن‪ -‬پوهنیار محمد رفیع شعیب‬

‫‪Shoaib‬‬
‫‪8/4/2025‬‬ ‫‪2‬‬
 Entrepreneurship ‫تشبثات‬

Chapter 5
Industry and Competitor Analysis

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 Entrepreneurship ‫تشبثات‬
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LEARNING OBJECTIVES
After reading this chapter, the reader should be able to:

1. Understand the business and environment trends.

2. Understand the concept of competitive strategy for a firm.
3. Find the Competitive Intelligence Framework for the Entrepreneur.

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Industry Analysis
❖An industry is a group of firms producing a similar product or service, such as
music, fitness drinks, or electronic games.
❖Industry analysis is business research that focuses on the potential of an industry.
❖Once it is determined that a new venture is feasible, a more in-depth analysis is
needed to learn the ins and outs of the industry.

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Cont…
❖Firm level performance and Industry level performance affects the performance of
a new entrant.
❖The firm level performances are set by the firm’s assets, products, culture,
teamwork, employee culture, internal resources and ethics.
❖The industry level factors include threat of new entrants, rivalry and competition,
bargaining power of supplier and bargaining powers of buyers.

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Assessing the industry attractiveness

In order to assess the industry attractiveness, the new firms should;

Study the Business and Environmental Trends

Assess the Five Competitive Forces Model

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Environmental Trends
❖Economic trends, social trends, technological advances, and political and
regulatory changes are the most important environmental trends for entrepreneurs
to study.
❖business owners are also thinking about major industry trends and new
technologies that will significantly impact the way they operate in the year ahead.
✓Health Tech
✓Fintech
✓Consumer Services
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Finding a Competitive Strategy and Developing New Strategy using Michael
Porter’s Five Forces
Threats of New
Entry

Competitive Threat of
Rivalries Substitution

Bargaining Power Bargaining Power

of Buyers of Suppliers
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Threats of New Entry

❖ The Threat of New Entrants, one of the forces in Porter’s Five Forces industry analysis framework,
refers to the threat that new competitors pose to current players within an industry.
❖If the firms in an industry are highly profitable, the industry becomes a magnet to new entrants.
❖Unless something is done to stop this, the competition in the industry will increase, and average
industry profitability will decline.
Barriers to New Entry
✓Economies of scale
✓Product differentiation
✓Capital requirements
✓Cost advantages independent of size(Technology, Raw materials, Location)
✓Access to distribution channels
✓Government and legal barriers
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Threat of Substitution
❖This force analyses how simple it is for consumers to switch products or services.
❖The Five Forces model of Porter prompts the entrepreneur to explore the chance
of his/her product getting replaced with an alternative that solves the same need.
Answers to these questions can help understand the strategy.
❖So an entrepreneur needs to ask what differentiates his product from his
competitions?
❖How many such alternatives are available in the market?
❖What is the switching cost for the customer?
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Bargaining Power of Suppliers

❖ This aspect considers a supplier's influence on a company.
❖Supplier also thinks the same way as any business does. Any change in their prices
thus affects the profitability of the entrepreneur.
❖The entrepreneur must always evaluate how many suppliers does the firm have,
how unique is the product or the service of the supplier, can it be replaced by
alternate suppliers and how does the price compare amongst all the suppliers?

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Bargaining Power of Buyers

❖One of the Five Forces is customers' capacity to push down prices. It depends on how
many clients a firm has, how important each one is, and the amount it would take to find
new ones.
❖The situation differs from firm to firm. In case of B2B the bargaining powers of buyers is
more compared to that of B2C.
❖One needs to determine whether buyers have the power to drive the prices down.
The questions every entrepreneur should answer therefore are,
❖The control the buyers have on his business, what is the order size of the buyers, could
the buyer switch to other supplier and what is the ROI of the product or service of the
buyer. Shoaib
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Competitive Rivalries
❖In most industries, the major determinant of industry profitability is the level of
competition among the firms already competing in the industry.
❖ The number and strength of the existing competitors is extremely important in
determining the market competition.
❖Questions like, quality of the entrepreneur’s product or service, number of competitors
in the market and the power of the biggest competitor determines the entrepreneur’s
success.
❖What will the customers gain or lose to switch to a competition product or service? The
distinct feature of the entrepreneur’s product or service decides his market success.
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Industry Types
❖Emerging Industries
Industries that are reasonably new. These are often due to advances in technologies.
Example: Social media, eCommerce, On demand video, Artificial Intelligence.
❖Fragmented Industries
Industries that have no dominant competitors that have significant market share There are
many companies sharing a fragmented market.
Example: Fast food, Fast casual food, Groceries,
❖Mature Industries
that have been around for along time and in which consolidation has led to only a few firms
with significant market share.
Examples: Automotive, Airlines, Computer manufacturing, Office productivity software.
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Cont…
❖Declining industries
Declining industries are mature industries that have passed their peak and are seeing
regular declines in revenues that have been going on for a long time and which do not
appear reversible.
Examples: Newspapers, tobacco products, photographic film, shopping centers, etc.
❖Global Industries
industries that have a global presence and must execute a global strategy.
Examples: Automotive, McDonalds, Steel, Oil, Shipping,

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Competitive Intelligence
❖Competitive intelligence (CI) means gathering information on risks and
opportunities and analysing this data to develop strategies.
❖helps a firm to assess their competitors’ strengths and weaknesses, markets.
❖In the early phases of strategy development, the PEST framework can be used to
understand the landscape in which the firm operates.

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Pest Framework
Political Economic Social Technological
Environmental Regulation Economic Growth Income Distribution Government support
Tax Policies Interest Rates Demography Industry focus
Trade Regulations Government spending Life style changes Inventions and innovation
Rate of Technology
Contractual/Labour Laws Employment Laws Entrepreneurial Spirit
Transfer
Government Policies Taxation Education Life Cycle of Technology
Energy Consumption &
Competition Regulation Exchange Rates Fashion Trends
Cost
Political Stability Inflation rate Social Welfare IT & Internet Usage
Mobile & Digital
Consumer Protection Stage of Business Cycle Living Standards
Technology
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Cont…
Competitive Intelligence can further be divided into
❖Communication Intelligence,
❖Financial Intelligence,
❖Technical Intelligence
❖Human Intelligence.

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Understanding the Competitive Analysis Grid

❖The competitive analysis grid should identify your competitors and include an
assessment of the key characteristics of the competitive landscape in your industry,
including competitive strengths and weaknesses and key success factors.
❖The entrepreneurs should keep in mind the following questions while analysing the
competitive grid.
✓Who are the top three or four competitors?
✓What are the range of products and services they offer?
✓What is the marketing strategy or tool of the competitors?
✓How do they fair in customer service?
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Competitive Analysis Grid for Sid’s Cycle Shop

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Various stages of entrepreneur

❖ PRE-Start
✓Discovery Stage: Where a scalable product/ service is identified, that has a huge potential for the
target market.
✓Validation: The product identified hits the market looking for the initial client or customer
❖ Growth
✓Efficiency: The entrepreneur looks for increasing the client or customer base
✓Scale: The entrepreneur looks for increasing capacity to grow in a sustainable manner
❖Post Maturity
✓Maintenance: This stage is focused on maintaining the markets and get maximum benefit
✓Sale or Renewal: There is a huge decision to sell the company or let it get acquired by a giant
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The End

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