ENTREP | Entrepreneurial Process and Forces of Competition

The Entrepreneurial Process

1. Business Idea Generation

2. Development of a Business Plan

3. Gathering of Resources

4. Managing of Resulting Enterprise

Business Idea Generation

• Also known as the identification and evaluation of opportunities.

• Generating an idea that you would like to innovate.

Development of a Business Plan

• A document that outlines a company's goals and the strategies to achieve them.

• Can use the Business Model Canvas

Gathering of Resources

• Methods that you will use to create your product.

• The materials and machine that you need in the production process.

Managing of Resulting Enterprise

• Opening up the business itself.

• Managing and monitoring the business operations

Michael Porter’s Five Forces of Competition

It is an analysis of competitive environment, which leads to some businesses inherently being more profitable. These include:

1. Buyers

2. Potential New Entrants

3. Rivalry among Existing Firms

4. Substitute Products

5. Suppliers

Buyers

• the ones that pay cash in exchange for your goods and services

• it is better for them to have lower power as they will not be able to easily switch businesses

Potential New Entrants

• companies or businesses that have the ability to penetrate or enter into a particular industry depending on the area’s rules and laws

• the stricter the laws of the area, the harder it is to enter the industry, making it less attractive

Rivalry among Existing Firms

• when business organizations compete with each other in a particular market

• an industry would be less attractive if there are more businesses to compete against

Substitute Products

• one that serves the same purpose as another product in the market, albeit provides different benefits

• an industry would be less attractive if there are more potential substitutes for your products

Suppliers

• the one that provide something that is needed in business operations such as office supplies and equipment

• an industry would be less attractive if there are less suppliers as a low number of suppliers entail that they control the market

Steps in Analyzing the Forces of Competition

1. Define the industry to be analyzed.

2. Identify the current situation relevant to the analysis.

3. Analyze the power of each force of competition and how they would impact the industry attractiveness.

4. Determine the overall attractiveness of the industry and the needed business strategy.