Keep reading to learn more about several key concepts in business market analysis.
SWOT is an acronym for Strengths, Weaknesses, Opportunities, and Threats. The SWOT analysis is a good tool for reviewing the strategies, position, or direction of a corporation or industry.
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Strengths include:
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Weaknesses include:
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Opportunities include:
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Threats include:
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First described by Michael Porter in the Harvard Business Review, the Five Forces is a framework for understanding an industry's competitive forces and the ways in which these forces drive industry stakeholders.
Bargaining Power of Buyers: powerful customers can drive down prices or demand more at existing prices
Bargaining Power of Suppliers: powerful suppliers can use their leverage to charge higher prices or demand more favorable terms
Threat of New Entrants: new entrants may force current stakeholders to hold prices down or spend more to retain customers
Threat of Substitute Products or Services: a new product meeting the same need in a different way affects profitability
Rivalry Among Existing Competitors: intense rivalry may drive down prices or dilute profits by raising the cost to compete
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The term Value Chain Analysis refers to the business activities and processes involved in creating a product or performing a service.
Keys to value chain analysis:
1) Identify value chain activities: understand the processes involved in creating your product
2) Determine the cost and value of activities: identify costs associated with each step of production
3) Identify opportunities for competitive advantage: evaluate production via the lens of your company's primary competitive goal