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c10 JWBT144/Gordon September 25, 2009 17:42 Printer Name: Courier Westford, Westford, MA
10
Plan for the War with
Your Competitors
Y
ou have identified an entrepreneurial opportunity. Now what? The next
step is to find out everything you can about your competition and the
industry dynamics. The term industry dynamics refers to the commercial
exchanges among five competing forces in the marketplace: the bargaining
power of buyers, the bargaining power of suppliers, the threat of substitutes,
the entry of new competitors, and the rivalry among existing competitors. It’s
a jungle out there! This chapter prepares you for the coming war with your
competition and enables you to:
r
Apply these five forces (Porter’s Five Forces) to your industry.
r
Identify good and bad industries.
r
Sleuth and analyze your competitors.
r
Become the fiercest competitor in your industry.
Porter’s Five Forces
What industry forces will you face when you launch and grow your venture?
Even though you have identified an opportunity, some industries are too
difficult to penetrate. Your opportunity makes sense only if it can capture
market share and become a positive Money Machine. According to Michael
Porter, there are five competing forces that come into play in every industry
(see Figure 10.1).
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