test 2- micro/macro level markets/industries

three ways to define a market segment
1. by who the customers are (age, gender, education)
2. by where the customers are (geographic location)
3. by how the customers behave (habits, health concerns)

(micro level market)
micro level market
attractiveness to target segment
Is moving quickly to get first mover advantage good?
-seldom pays off to launch quickly, to get first move advantage
-if you arn't prepared, later entrants who are more prepared will over take your business
(micro-level market)
what is the first thing that should be done when evaluation business idea?
-determine who your target customers are: what is their pain & what solutions do you offer?
-determine if solutions you have are superior to solutions that already exists in the market place
-determine growth potential of your idea:consider size of target market and how fast its growing
-determine if there will be other avenues of growth available: will it provide entry into other segments later & can you develop capabilities that are transferable to other segments

(micro level market)
Macro Level Market
decide what size business the founders desire:
-is goal to be small local w/o growth objectives or to be multinational player in market place
must answer the question of what size the business will be inorder to...
evaluate what market trends mean to you business

(macro level market)
macro level market trends are critical for determining...
the long term growth potential of your business
3 questions when determining the long term growth potential of your business...
1. is the market large enough to allow different competitors the opportunity to serve different segments without getting in each others way
2. what are the predictions for your markets short term growth rate
3. what are the predictions for your markets long term growth rate

(macro level market)
t/f you should measure market trends in as many different ways as possible

(macro level market)
ways to measure market trends
other natural trends

(macro level market)
things to know about market trends
-different trends pain different pictures for your market
-some trends are more relevant to your business than others
-important to get as detailed of an evaluation of market as possible and consider how theses different trends work together to tell what the future of the market means for your business.

(macro level market)
falling in love with business idea
-dont fall in love with business idea
-ex. Thinking machines
-dont blindly build business around a cool product or service without fully considering wether there is a market demand

(macro level market)
Macro level industry
-before conducting industry analysis...must define your industry
-important to have focus and not be too broad
-however, also important not to be so narrow that you don't recognize other substitutes for your products/services

(macro level industry)
before conducting industry analysis...
must define your industry

(macro level industry)
5 macro level factors that should be used to assess your industry are called
Porters 5 forces

(macro level industry)
the 5 macro level factors (porters) that should be used to assess your industry are
1. threat of entry
2. supplier power
3. buyer power
4. threat of substitutes
5. competitive rivalry

(macro level industry)
t or f: fast growing markets bring profitability

(macro level industry)
fast growing markets can be very attractive to entrepreneurs, but...
-growth is not always a indicator of profitability
-an entrepreneurial opportunity is one that enables you to extract profit

(macro level industry)
t of f: a good industry is often more important than a good market, business idea or team
what is more important, a good industry, or a good market/business idea/management team
give example
good industry
-dsl market has positive characteristics in terms of size and growth, but industry is not favorable for new businesses to enter b/c higher supplier power and intense competitive rivalry

(macro level industry)
do industries remain constant?
no, they vary in attractiveness over time

(macro level industry)
Micro-level industry
sustainable advantage
even if in unattractive industry, a firm can be successful if they...
have developed a sustainable competitive advantage

(micro level industry)
factors to help firm develop a sustainable competitive advantage:
1. proprietary elements like patents and trade secrets
2. superior organizational processes, capabilities, or resources that are difficult for others to duplicate or imitate
3. an economically viable business model, in that the company will not run out of cash quickly

(micro level industry)
to determine wether a company is economically viable, the following factors should be considered:
1. how much it will cost to attract and maintain customers
2. are gross margins sufficient to cover the necessary cost structure
3. are operating cash cycles favorable

(micro level industry)
down fall to patents
patent is not useful if someone else can develop a different product or service that is a cheaper and or more effective alternative to yours

(micro level industry)
how knowledge in one industry effects others
-knowledge gained from experience/success in one industry can blind entrepreneurs to differences in other industries
-ex. Louis border success in book retail led him to believe firms who built largest/sophisticated physical infrastructure would develop competitive advantage in dot com market place, but ebay showed that those who develop viable business with minimal physical infrastructure and maintain high gross margins would be the most successful

(micro level industry)