5 Competitive Drivers Which Limit Your Growth Ability
Way back in 1979, Michael E. Porter proposed his Five Forces framework for analyzing the competitive environment which I think makes even more sense today. Every existing business, as well as every startup, needs to reassess their product or service in the context of these five forces:
A few years after Porter, Andrew Grove is credited with postulating a sixth force in the marketplace – government, pressure groups, and the public. This force adds the concept of “complementors,” and has led to the growth of partners and strategic alliances to balance the competitive environment. These forces make up the micro environment of a company, which affect its ability to serve its customers and make a profit. A change in any of them should be your cue to re-assess the marketplace. All startups need to remember their core competences, business model, or network, which are the factors that allow them to maintain a competitive advantage.
One of the key sections of every entrepreneur’s business plan is the analysis of the competition. I especially love the ones that start and end by saying “We don’t have any competitors.” Investors take that to mean either 1) there is no market for your product, or 2) you don’t understand the concept of business and competition. Either way you lose.
I always remind startups that this section of the business plan should not be a negative one, merely listing competitors, with their advantages and head start. It’s your opportunity to highlight and emphasize your relative advantages, whether they be price, features, bargaining power, or any of the six forces outlined above.
On the other hand, there is more at stake for startups than enterprises because startups do not have the same financial capital of their bigger rivals. But with a clear understanding of where the power lies, you can take advantage of a position of strength, improve a situation of weakness, and avoid stepping into a pack of wolves with no protection. It’s a painful end.
Marty Zwilling
Martin Zwilling is the Founder and CEO of Startup Professionals, a company that provides services to startup founders around the world. See more details at www.startupprofessionals.com
Source: https://blog.startupprofessionals.com/2023/07/5-competitive-drivers-which-limit-your.html
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