24 Nov '11, 6am

Starting a new company? Do industry analysis (part one)

Starting a new company? Do industry analysis (part one)

Bargaining power over suppliers. There are few suppliers compared to the number of companies it sells to in an industry, and its products or services are such that they attract few substitute decisions from end-customers. Bargaining power over oil companies is low because they are a cartel. Bargaining power over buyers. When buyers are able to purchase in bulk or products are a commodity, buyers can seize bargaining power and drive down industry profits. Daily-deal sites (group buying), is an example of buyers driving down retailer profits. Threat of substitute products and services. How likely are customers to use a substitute product or service from another industry? Electric motors are a substitute for petrol engines, but substitution of electric motors remains low because electric power cells are inconvenient to recharge. Threat of new competition entering the market. ...

Full article: http://sgentrepreneurs.com/commentary/2011/11/24/starting...

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