CORE COURSE ENTREPRENEURSHIP

IN BUSINESS AND MANAGEMENT

MODULE

The Industry and the Context of the Firm

Week 5. Part 3.
Tim Wawn
Key Learning Objectives
At the conclusion of this video lecture,
participants should be able to:
● Apply Porter’s 5 Forces model to identify
the key elements in a venture’s external
context which may impact on
performance
Generic Planning Process for Developing a Strategy

Source: Byers T.H., Dorf R.C., and Nelson A.J.,

‘Technology Ventures: From Ideas to Enterprise’
How do we identify the potential impact the External
Context is going to have on our Venture?

Source: Porter M. ‘Competitive Strategy’

Generic Planning Process for Developing a Strategy

Source: Byers T.H., Dorf R.C., and Nelson A.J.,

‘Technology Ventures: From Ideas to Enterprise’
 Basic Product Life
Cycle

Source: ‘Universal Principles of Design’

Porter’s 5 Forces Model

The 5 forces that shape an industry

and help determine the opportunities
and threats for a venture arising from
its external context

Source: Porter M. Competitive Strategy

Porter’s 5 Forces Model: Competitive
Rivalry Among Existing Firms

• How many existing competitors

(concentration)?
• What are the main forms of competition –
price, quality, product attributes?
• What is the level of innovation among
competitors?
• Are competitive advantages sustainable?
• What is the impact of government policy
on competition?
Porter’s 5 Forces Model:
Supplier Power

• How many suppliers?

• What size are the suppliers – large,
small?
• How similar are supplier products?
• Is it easy to switch from 1 supplier to
another?
• What is the level of innovation among
suppliers?
 Porter’s 5 Forces
Model: Buyer Power

• How many buyers (customers) – many or

few (concentration)?
• What is the typical order size?
• What factors are most important to buyers?
• Level of price sensitivity?
• Is it easy for buyers to switch?
Porter’s 5 Forces Model:
Threat of New Entry

• Is it expensive to enter the industry?

• Are there specialist skills or technologies
required?
• Are there economies of scale?
• Are there intellectual property barriers?
• Do government policies support or
hinder new entrants?
Porter’s 5 Forces Model:
Threat of Substitution

• What substitute products exist?

• How easy is it to substitute product and
achieve equivalent performance?
• What switching costs are involved?
• Do buyers have a propensity to switch?
Thank you
 References
▪ Byers T., Dorf R., and Nelson A., Technology Ventures: From Idea to Enterprise (4th
Edition), McGraw-Hill.
▪ Dalio R., Principles, Simon & Schuster
▪ Deming W.E., Out of the Crisis, The MIT Press
▪ Gans, J., Scott, E.L., and Scott, S. ‘Strategy for Start-ups’, Harvard Business Review,
May-June 2018
▪ Harvard Business Review, Entrepreneurs Handbook, Harvard Business Review Press
▪ Johnson K., The Entrepreneur Mind: 100 Essential Beliefs, Characteristics, and Habits
of Elite Entrepreneurs, Johnson Media
▪ Mullins, J., The New Business Road Test: What entrepreneurs and executives should do
before writing a business plan. (3rd Edition), Pearson UK.
▪ Osterwalder, A. and Pigneur, Y. Business Model Generation, John Wiley & Sons
▪ Porter M., Competitive Strategy, The Free Press
▪ Ries E., The Lean Startup, Portfolio Penguin
▪ Schramm, C. ‘What many Business Schools teach has little to do with Entrepreneurial
success’, Harvard Business Review, May-June 2018