Competitive Analysis of the Market

Important Note :The latest notes is available at class 11 Entrepreneurship

1. Why is a competitive analysis of the market necessary?

A competitive analysis of the market is necessary for the following reasons:

  1. To get an insight into the status of the market for the entrepreneur’s product or the service.
  2. To get a real and a pragmatic picture of the strength and marketability fo the product in comparison to the like in the market.
  3. To understand the market forces and their influence on the vulnerability fo the products or services marketed by a particular entrepreneur.
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2. What information does the entrepreneur get through competitive analysis?

A competitive analysis of the market is necessary to know the following:

  1. The vector dimensions of the market
  2. The potential entrants into the market
  3. The direction of change in the consumer trend
  4. The direction of change in the type and quality of the products
  5. The potential buyers in the market
  6. The threat of substitutes or new products.
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3. How does the entry of the new entrepreneurs affect the existing entrepreneurs?

The entry of the new entrepreneurs affect the existing entrepreneurs either in terms of

  1. a new idea
  2. a new package
  3. a new service
  4. lower cost etc.

This might destabilize the existing entrepreneurs dominance in the market.

This threat could enter in the following models:

  1. Through large-scale capital interventions
  2. Through large-scale volume interventions
  3. Through large-scale distribution interventions
  4. Through establishing a distinct competency
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4. How does high capital investment enterprises affect a small entrepreneur?

High capital investment enterprises affect a small entrepreneur in the following ways:

  1. The small entrepreneurs lose their monopoly market, if the product/service is unique in nature.
  2. The market life of small entrepreneur’s product is reduced.
  3. It results in disequillibria in the market for the small entrepreneur.
  4. The quantum of capital investment may be so large that the moderate or small-scale entrepreneur might find it extremely difficult to compete them due to lack of investments matching the new entrant.
  5. when the high capital investment enterprise is a multi-national player, the investment might be so large that it severely affect the indigenous entrepreneur.
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6. How does the volume of flow of goods in the market affect a new entrepreneur?

The volume of flow of goods in the market affect a new entrepreneur in the following ways:

  1. When the volume is more from any single entrepreneur, it creates a disequillibria in the market.
  2. The new entrepreneur might lose his market as the consumers would incline towards a product or service that is easily accessible.
  3. The new entrepreneur would not be able to provide the needed supply to the market.
  4. This might even throw the new entrepreneur into greater risk, if such inflow is not anticipated before entering the market.
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7. What marketing strategies you would suggest to a new entrepreneur facing the challenge of mass production and distribution in the market?

I suggest the following marketing strategies for an entrepreneur facing the challenges of mass producton and distribution.

  1. They should capitalize the estabilished brand name to retain their customers.
  2. Brining in innovative products will help them to sustain their market share, though the regular products and services are available abundantly in the market.
  3. They should have a strategic plan to ensure that their market share is sustained.
  4. They should start building a well organized distribution systems.
  5. They should have a good hold in the market and try to penetrate into the market.
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8. Why a good network of the distribution systems essential for an entrepreneur?

A good network of the distribution systems is essential for an entrepreneur due to the following reasons.

  1. Access to the potential market becomes easy.
  2. Brings a fair advantage in the market over the others, though his product may not hae that defined quality as that of the other entrepreneurs.
  3. Helps the entrepreneur to maintain the hold he has in the market vis-a-vis that of the counterparts
  4. Drives the peneration in the market and helps the entrepreneur to have a hold on the market, there by leading to the success of the entrepreneur.
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9. What impact does branding have on a market?

  1. Branding helps the products to remain as unique without any competition.
  2. It creates a recognition for the product among the consumers.
  3. Branding helps in increasing the reputation or the status of the entrepreneur thus creating more weightage for any new ventures.
  4. Establishing a brand makes it difficult for the competitors to establish a competition.
  5. For an entrepreneur without a brand image, it requires more effort to establish competence and sustainability for his product.
  6. When an entrepreneur enters the market with recognized brands it becomes easy to grab the market shared by an established entrepreneur.
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10. What suggestions you would offer to a new entrepreneur who has to fight against an established brand of consumer good?

The following suggestions will be of help for a new entrepreneur who has to fight against an established brand of consumer goods.

  1. They should strategically plan and try to penetrate into the market. Being more innovative will be of great help to divert the customers who are accustomed to an already estabilished bran.
  2. They should try to establish their own brand or image or service.
  3. They should demonstrate a strong competence and sustainability of their product or service.
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11. How does the power of buyers affect an entrepreneur?

Depending upon the power of buyer, they may be classified as industries, wholesale agents or people dealing with customer services.
In such cases there are limited buyers for the goods produced. Under these circumstances, the buyer always has an advantage. The buyer tends to dictate terms to the entrepreneurs with regard to the quality, cost, quantity and time of deliver to the entrepreneurs.
On many occasions, the entrepreneurs have to hold stocks of their goods or produce to meet the requirements of the buyers.
When the buyer is strong and the number of producers are more, it leads to a healthy competition among the producers leading to certain terms with the buyer.

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12. In the event of a limited supply of raw material, what precautions you would suggest to a new entrepreneur to keep his product line alive?
In the event of a limited supply of raw material, the new entrepreneurs should exercise the following precautions to keep their product line alive.

  1. They should try to maintain adequate inventory of the raw material.
  2. Strategic planning and forecasting of the demand for their product or services, well in advance, can help them to meet customer demands.
  3. They should ensure that a back up plan is already available so that whey the supply from one vendor is affected, it’ll be available from the other.
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13. How does the emergence of substitutes affect the existing market of a given product? What suggestions you would offer to an entrepreneur to meet the challenge?

As the market is hightly competitive, entrepreneurs tend to innovate and introduce new types of products, to suit to the taste or the fancy of the consumers.
This leads to the creation of the new products, alternatives, substitutes to make their way into the market.
The emergence of the new substitutes, alternatives might pose a potential threat or a competition to the existing market stability of the entrepreneur.

To meet these challenges, the entrepreneurs may adopt the following strategies.

  1. Keep a close watch on the market and keep their product or service up to date with the market and consumer trend.
  2. Try to ensure that they upgrade and release better product or service into the market before the competitors.
  3. Keep studying the consumer behaviour and change their product or service accordingly.
  4. Establish a good brand in the market.
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Other useful resource for your reference
Books & Other Material

  1. Entrepreneurship: Concept and Functions
  2. An Entrepreneur
  3. Entrepreneurial Journey
  4. Entrepreneurship as Innovation and Problem Solving
  5. Concept of Market
  6. Business Finance and Arithmetic
  7. Resource Mobilization

6 Comments (+add yours?)

  1. Paras Bhutoria
    Jan 22, 2013 @ 06:53:52

    PLz send all answers of chapter15 now

    Reply

    • allabakash
      Jan 23, 2013 @ 23:25:45

      Hi Paras,
      I’ve added most of them. Please refer.

      Reply

      • Paras
        Jan 27, 2013 @ 03:25:57

        ANswers of chapter 15- 7,10,12 plz give us as exam of ep is on 2 feb

      • allabakash
        Jan 27, 2013 @ 11:20:06

        I’ve provided the answers. All the best for your exams.

  2. Heman
    Jan 18, 2013 @ 05:01:46

    Please give all the anwers of 15th chapter as soon as possible…..

    Reply

    • allabakash
      Jan 23, 2013 @ 23:25:24

      Sorry for the delay. Please refer the updates.

      Reply

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