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New+Venture+slides+day+4-+chapter+5-+upload - Industry and...

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Professor Joshua Hernsberger The Paul Merage School of Business University of California, Irvine Industry and Competitor Analysis
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What is Industry Analysis? Industry An industry is a group of firms producing a similar product or service, such as airlines, fitness drinks, furniture, or electronic games. Industry Analysis Is business research that focuses on the potential of an industry.
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Why is Industry Analysis Important? Learn the Details of the Industry Why are the details important? Helps Determine if the Market is Favorable for the New Firm
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Three Key Questions When studying an industry, an entrepreneur must answer three questions before pursuing the idea of starting a firm. Is the industry accessible—in other words, is it is realistic place for a new venture to enter? Are there positions in the industry that avoid some of the negative attributes of the industry as a whole? Does the industry contain markets that are ripe for innovation or are underserved? Question 1 Question 3 Question 2
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How Industry and Firm-Level Factors Affect Performance Firm Level Factors Include a firm’s assets, products, culture, teamwork among its employees, reputation, and other resources. Industry Level Factors Include threat of new entrants, rivalry among existing firms, bargaining power of buyers, and related factors. Conclusion In various studies, researchers have found that from 8% to 30% of the variation in firm profitability is directly attributable to the industry in which a firm competes.
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Techniques Available to Assess Industry Attractiveness Study Environmental and Business Trends The Five Competitive Forces Model Assessing Industry Attractiveness
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The Five Competitive Forces Model Explanation of the Five Forces Model The five competitive forces model is a framework for understanding the structure of an industry. The model is composed of the forces that determine industry profitability. They help determine the average rate of return for the firms in an industry. Each of the five-forces impacts the average rate of return for the firms in an industry by applying pressure on industry profitability. Well managed firms try to position their firms in a way that avoids or diminishes these forces—in an attempt to beat the average rate of return of
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The Five Competitive Forces Model
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Threat of Substitutes Threat of Substitutes The price that consumers are willing to pay for a product depends in part on the availability of
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New+Venture+slides+day+4-+chapter+5-+upload - Industry and...

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