Assess your business environment
For more information see Small Capital Chapter 2
Getting a good measure of your success (and your potential for growth) doesn’t only require analysing
your own business – you must also analyse the competition. Use the table below to consider all the
factors that could be a threat or opportunity for your business.
The “X” indicates whether the item is considered to be a threat or opportunity – circle those that you
think are true for your business environment. When you have completed the table, evaluate each
circled threat (and opportunity) and brainstorm ways to avoid (or take advantage) of these.
INDUSTRY/COMPETITIVE FORCE
Current rivalry
Numerous competitors
Few competitors
Equally balanced competitors
One or a few strong competitors
Industry sales growth slowing
Industry sales growth strong
High fixed or inventory storage costs
Low fixed or inventory storage costs
No differentiation or no switching costs
Significant differentiation or significant or switching costs
Large capacity increments required
Minimal capacity increments required
Diverse competitors
Similar competitors
High strategic stakes
Low strategic stakes
High exit barriers
Minimal exit barriers
Potential entrants
Significant economies of scale
No or low economies of scale
Cost disadvantages from other aspects
No other potential cost disadvantages
Strong product differentiation
Weak product differentiation
Huge capital requirements
Minimal capital requirements
Significant switching costs
Minimal switching costs
Controlled access to distribution channels
Open access to distribution channels
Government policy protection
No government policy protection
© Words’worth 2008
THREAT
OPPORTUNITY
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Bargaining power of buyers
Buyer purchases large volumes
Buyer purchases small volumes
Products purchased are significant part of buyer’s cost
Products purchased aren’t significant part of buyer’s cost
Products purchased are standard or undifferentiated
Products purchased are highly differentiated and unique
Buyer faces few switching costs
Buyer faces significant switching costs
Buyer’s profits are low
Buyer’s profits are strong
Buyer has ability to manufacture products being purchased
Buyer doesn’t have ability to manufacture products
Industry’s products aren’t important to quality of buyer’s
products
Industry’s products are important to quality of buyer’s
products
Buyers have full information
Buyers have limited information
Bargaining power of suppliers
Supplying industry has few companies and is more
concentrated
Supplying industry has many companies and is fragmented
There are no substitute products for supplier’s products
There are substitute products for supplier’s products
Industry being supplied is not an important customer
Industry being supplied is an important customer
Supplier’s product is an important input to industry
Supplier’s product is not an important input to industry
Supplier’s products are differentiated
Supplier’s products aren’t differentiated
There are significant switching costs in supplier’s products
There are minimal switching costs in supplier’s products
Supplier has ability to do what buying industry does
Supplier doesn’t have ability to do what buying industry does
Substitute products
There are few good substitutes
There are several not-so-good substitutes
There are no good substitutes
© Words’worth 2008
X
X
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X
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X