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ENTR Quiz 2
Chapter 5
| Term | Definition |
|---|---|
| industry analysis | - business research that focuses on an industry's potential - the knowledge gained from this analysis helps a firm decide whether to enter an industry and if it can carve out a position in it that will help provide a competitive advantage |
| environmental and business trends | two main components of industry trends that firms should study |
| environmental trends | economic, social, technological advances, political/regulatory changes |
| business trends | other business-related trends that aren't environmental but are important to recognize |
| Porter's 5 Forces Model | framework for understanding the structure of an industry, helps determine industry profitability |
| threat of new entrants | firms try to keep other firms from entering their industries by erecting barriers to entry |
| barrier to entry | a condition that creates a disincentive for a new firm to enter an industry |
| economies of scale | when mass-producing a product results in lower average costs |
| product differentiation | characterized by firms with strong brands |
| capital requirements | the need to invest large amounts of money to gain entrance |
| cost advantages independent of size | entrenched competitors may have cost advantages that are not available to new entrants |
| access to distribution channels | finding space to locate product so it will sell |
| government and legal barriers | patents, trademarks, and copyrights |
| nontraditional barriers to entry | - strength of management team - first-mover advantage - passion of the management team/employees - a unique business model - special internet domain name - inventing a new approach to an industry and executing the approach in an exemplary manner |
| 4 industry-related questions that a firm should after before entering an industry | - is it a realistic place for a new venture? - can we do better than the industry in avoiding/diminishing threats? - is there a unique position that avoids/diminishes suppression? - is there a superior business model that can be put in place? |
| emerging industries | new industries in which standard operating procedures have yet to be developed |
| first-mover advantage | an advantage gained by the first company to establish a significant position in a market |
| fragmented industry | characterized by a large number of firms of approximately equal size |
| geographic roll-up strategy | in which one firm starts acquiring similar firms that are locate in different geographic areas |
| mature industry | an industry that is experiencing slow or no increase in demand, has numerous repeat customers, and has limited product innovation |
| declining industry | an industry that is experiencing a reduction in demand |
| leadership strategy | when the firm tries to become the dominant player in the industry |
| niche strategy | focuses on a narrow segment of the industry that might be encouraged to grow through product or process innovation |
| cost reduction strategy | achieving lower costs than industry incumbents through process improvements |
| global industry | an industry that is experiencing significant international sales |
| multidomestic strategy | compete for market share on a country-by-country basis and vary their product or service offerings to meet the demands of the local market |
| global strategy | uses the same basic approach in all foreign markets |
| competitor analysis | - detailed analysis of a firm's competition - helps a firm understand the positions of its major competitors and the opportunities that are available to obtain a competitive advantage in one or more areas |
| direct competitors | businesses that offer products identical or similar to those of the firm completing the analysis |
| indirect competitors | offer close substitutes to the product the firm completing the analysis sells |
| future competitors | not yet direct or indirect competitors but could move into one of these routes at any time |
| competitive intelligence | information that is gathered by a firm to learn about its competitors |
| ways to ethically obtain information about competitors | - attend conferences and trade shows - purchase competitors' products - study competitors' websites - talk to customers |
| competitive analysis grid | - tool for organizing the information a firm collects about its competitors - can help see how a firm stacks up against its competitors - provides ideas for markets to pursue - identifies its primary sources of competitive advantages |
Created by:
allisonj
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