COMM 320 Lecture Notes - Lecture 3: Foal, Convenience Store, Competitor Analysis
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Week 3 chapter 5 industry & competitor analysis; business model: when studying the industry, we need to answer 3 key questions: What are the barriers to entry? o economies of scale? o product highly differentiated? o capital requirements? o cost advantages of incumbents? o. This means that products or services fro(cid:373) other i(cid:374)dustries (cid:272)a(cid:374)"t easily ser(cid:448)e as su(cid:271)stitutes for the produ(cid:272)ts or ser(cid:448)i(cid:272)es (cid:271)ei(cid:374)g (cid:373)ade a(cid:374)d sold i(cid:374) the fo(cid:272)al fir(cid:373)"s i(cid:374)dustry. 2) threat of new entrants: industries are more attractive when the threat of entry is low. A barrier to entry is a condition that creates a disincentive for a new firm to enter an industry. Economies of scale: industries that are characterized by large economies of scale are difficult for new firms to enter, unless they are willing to accept a cost disadvantage. Economies of scale occur when mass-producing a product results in lower average costs.