lesson 6

• Competition


  Contest between several firms selling similar goods and services
• Competitor


  Person/Entity which is a rival of another
• Competitor


  Company in the same industry or a similar industry which offers a similar product/service
• Advantages of Competition

  • Competition makes your customer service better
  • Competition fosters innovation
  • Competition helps identify your strengths and Weaknesses
  • Competition is good for consumers
  • Competition reminds you to focus on your key customers
  • Competition provides the opportunity to serve
  • Competition makes way for creative thinking
  • Competition helps identify potential threats to your business
  • Competition helps identify your strengths and weaknesses
  • Competition stops complacency
• Customers


  Individual/business that purchases another company's goods or services
• Customers


  Important because they drive revenues
• Customers


  They create demand for goods and services
• Suppliers


  Either the manufacturer who manufactures the product itself or a distributor who purchases the goods from manufacturers
• Suppliers


  Entities who supply goods and services
• Substitutes


  Product/service that can be easily replaced with another by customers
• Substitutes


  Products that can be used instead of another
• Products

  In economics, they are often substitutes if the demand for one product increases when the price of the other goes up
• SWOT Analysis

  Strengths, Weaknesses, Opportunities, Threats
• SWOT Analysis


  Tool for business analysis which every organization needs to get through greater heights of success
• Strengths


  • Positive internal characteristics that the organization can exploit to achieve its strategic performance goals
• Weaknesses


  • Internal characteristics that might inhibit the organization's performance
• Opportunities


  • Characteristics of the external environment that have the potential to help the organization achieve or exceed its strategic goals
• Threats


  • Characteristics of the external environment that may PREVENT the organization from achieving its strategic goals
• Steps in Creating a SWOT Analysis

  1. Determine the objective

  2. Create a grid

  3. Label each box

  4. Add strengths, weaknesses, opportunities, and threats

  5. Draw Conclusions
• Poster's Five Forces of Competitive Analysis


  Another tool that uses FIVE INDUSTRY FORCES to determine the intensity of competition in an industry and its profitability level
• Michael E. Porter


  From Harvard University, studied a number of business organizations and proposed that business-level strategies are result of 5 competitive forces in the company's environment
• The 5 Competitive Forces

  • Potential new entrants
  • Bargaining power of buyers
  • Bargaining power of suppliers
  • Threats of substitute products
  • Rivalry among competitors
• Steps used in Porter's Five Framework

  1. Gather the information no each of the five forces

  2. Analyze the result and display them on a diagram

  3. Formulate strategies based on the conclusions