Exercise 4.1
Describing your market/industry
1. Research your general market/industry and your TAM at a macro level. Find out as
much as you can about the size, growth and structure of the market, market trends,
customer demographics, buying patterns, established channels of distribution etc.
Which market/industry typologies characterize it? Note the implications of this.
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2. How is the particular market you are targeting – your SAM – different (e.g. local vs
national, other characteristics)? Repeat 1 for your SAM.
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3. List your direct and indirect competitors. Against each, list their strengths and
weaknesses as companies.
Competitor Name
Strengths
Weaknesses
Direct Competitor 1
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Direct Competitor 2
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Direct Competitor 3
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Indirect Competitor 1
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Indirect Competitor 2
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Indirect Competitor 3
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4. List the strengths and weaknesses of the products or services they produce that
compete with yours.
Direct Competitor 1
Service/Product 1
Strengths
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Weaknesses
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Service/Product 2
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Service/Product 3
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Service/Product 1
Strengths
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Weaknesses
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Service/Product 2
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Service/Product 3
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Service/Product 1
Strengths
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Weaknesses
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Service/Product 2
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Service/Product 3
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Strengths
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Weaknesses
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Direct Competitor 2
Direct Competitor 3
Indirect Competitor 1
Service/Product 1
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Service/Product 2
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Service/Product 3
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Service/Product 1
Strengths
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Weaknesses
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Service/Product 2
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Service/Product 3
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Service/Product 1
Strengths
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Weaknesses
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Service/Product 2
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Service/Product 3
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Indirect Competitor 2
Indirect Competitor 3
Exercise 4.2
Assessing the degree of competition
The Five Forces model can be used to assess the degree of competition you face in an
existing market/industry and, hence, the threat to your profitability. However, there may be
things you can do to mitigate this threat. Complete the table on the following page, for each
of the forces:
1. Assess the threat to industry profitability.
2. Note the implications of this for you.
3. List the actions you need to take to ensure that you can avoid or lessen the effect of
high threats to profitability.
4. List the actions you need to take to create a sustainable position that means others
cannot copy these actions
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Competitive Force
Rivalry Among existing firms
(e.g. number of competitors,
industry structure, degree of
product differentiation etc.)
Threat of substitutes (e.g.
degree of product
differentiation, switch costs
etc.)
Threat of new entrants (e.g.
barriers to entry, switch
costs, economies of scale,
access to distribution
channels, degree of
differentiation, capital
requirements etc.)
Bargaining power of
suppliers (e.g. switch costs,
supplier concentration,
attractiveness of substitutes
etc.)
Bargaining power of buyers
(e.g. switch costs, buyer
concentration, product
differentiation, buyers’ costs
etc.)
Threat to Industry
Profitability
[Low, Medium, High]
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Implications
Actions to lessen/avoid
threats
Actions to sustain position
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© Paul Burns 2014
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Exercise 4.3
Assessing your market/industry future
1. Undertake a SLEPT analysis on your market/industry to identify key influences or
events that might affect it over the next five years.
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2. Using the market/industry analysis from Exercises 4.1 and 4.2, construct three
scenarios– ‘best’, ‘worst’ and ‘most likely’ cases – that reflect how these influences or
events might impact upon the trends in the industry. Remember to factor in the
existence of your firm.
• Will the industry expand or contract? Will it consolidate or fragment?
• Are the main dimensions of competition changing and what is driving this change?
• Will sectoral, performance and/or customer conventions change?
• Will competition intensify or will products become more differentiated?
• How will direct and indirect competitors be affected?
• How might they react to your existence?
• How will their reaction affect you?
Best Scenario
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Worst Scenario
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Most Likely Scenario
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3. Brainstorm to explore how you might react to these trends and competitors.
 What strategies might you adopt?
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 Will you need to modify or change your product/service idea?
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 Will you need to identify and enter new markets?
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4. List the critical success factors for your business – the things you need to get right to
ensure your survival and success.
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New Venture Creation: A framework for entrepreneurial start-ups
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© Paul Burns 2014
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