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BAEB501 : ENTREPRENEURSHIPCHAPTER 3:RESOURCE AND CAPABILITIES
© 2010 Cosmopoint
Slide 2 of [11]
Chapter 3: Resource and Capabilities
© 2010 Cosmopoint
Topic Outlines
3.1 Introduction3.2 Business Tools3.3 Porter’s 5 Forces3.4 Competitive Rivalry3.5 Power of suppliers 3.6 Power of buyers 3.7 Threats of substitutes3.8 Threat of new entrants
© 2010 Cosmopoint
Slide 3 of [11]
Chapter 3: Resource and Capabilities
© 2010 Cosmopoint
Learning Outcomes
After completing this chapter, student should be able to: Define the Porter’s 5 Forces Identify each of 5 forces Understand how 5 forces can influence in business
Topics© 2010 Cosmopoint
Slide 4 of [11]
Chapter 3: Resource and Capabilities
© 2010 Cosmopoint
3.1 Introduction
Topics
How can business be successful?
How can business maximize profit?
Business field is very competitive. There are a lot of examples that we can see around us. E.g automobile, fast food outlet,
airlines industry, oil and gas, watches, clothes, etc.
How does a brand still be a preferred brand to customers?
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Chapter 3: Resource and Capabilities
© 2010 Cosmopoint
3.2 Business Tools
Topics
Since business is very competitive. Entrepreneur need to identify:
- Strategies,
- Business tools
- Planning in order to expand his/her business.
For example:
Porter’s 5 Forces
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Chapter 3: Resource and Capabilities
© 2010 Cosmopoint
3.3 Porter’s 5 Forces
Topics
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Chapter 3: Resource and Capabilities
© 2010 Cosmopoint
3.4 Competitive Rivalry
Topics
Is there a strong competition between existing players? – Need to analyze and research your industry.
Is it one player very dominant or equal? Monopolistic?
Generally competitive rivalry will be high if: There is little differentiation
between the products sold between customers.
Competitors are approximately the same size of each other.
If the competitors all have similar strategies.
It is costly to leave the industry hence they fight to just stay in ( exit barriers)
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Chapter 3: Resource and Capabilities
© 2010 Cosmopoint
3.5 Power of suppliers
Topics
Suppliers do have power. This power comes from:
If they are the only supplier or one of few suppliers who supply that particular raw material.
If it costly for the organization to move from one supplier to another (known also as switching cost)
If there is no other substitute for their product.
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Chapter 3: Resource and Capabilities
© 2010 Cosmopoint
3.6 Power of buyers
Topics
Power of buyers happens when: There is little differentiation over the
product and substitutes can be found easily.
Customers are sensitive to price. Most customer will concern about the
prices. They will do comparison which one is cheaper.
Switching to another product is not costly.
Can they work together to order large volume?
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Chapter 3: Resource and Capabilities
© 2010 Cosmopoint
3.7 Threats of substitutes
Topics
The threat of substitute is high when:
Price of that substitute product falls. It is easy for consumers to switch from
one substitute product to another. Buyers are willing to substitute.
How easy can your product or service be substituted? When it is cheaper. E.g: Email vs. Fax, Toothpaste reduces
the need of dentist, Video Supplier vs. Travel Company.
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Chapter 3: Resource and Capabilities
© 2010 Cosmopoint
3.8 Threat of new entrants
Topics
The threat of a new organization entering the industry is high when it is easy for an organization to enter the industry i.e. entry barriers are low.
An organization will look at how loyal customers are to existing products, how quickly they can achieve economy of scales, would they have access to suppliers, would government legislation prevent them or encourage them to enter the industry.
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Chapter 3: Resource and Capabilities
© 2010 Cosmopoint
Announcement
Project Group (20%)- 4 to 5 persons in a group- Submit business type- Next week topic Business Plan + Revision
on Midterm
