Advertising

How Not to Start from Zero for New Startups

How Not to Start from Zero for New Startups
Advertising

Looking to start a business but are unfamiliar with the potential profitability in the industry, and don’t really want to start everything from zero?

This simple tool is the perfect one for you to start with — Porter’s Five Forces Model. It is an effective tool to evaluate the existing market.

And if sometimes you are asked to analyze a market and identify its major competitors but you are struggling on where to begin; or, if you are looking to raise your company’s competitiveness in the industry, the Porter’s Five Forces Models could then be your remedy.

What exactly are the Porter’s Five Forces?

The Porter’s Five Forces Model is named after Michael E. Porter, an economist. He proposed the model in his 1979 book Competitive Strategy. While there are different names for the five forces to different experts, they are essentially the same. Generally, the five forces are as follows:

    1. Threat of Substitution

    It concerns the availability of substitutes products or services from the competitors. Porter’s definition of substitute good in the model refers to a good in another industry. The goods or services are substitutes if they can be used in place of one another. This force is affected by various factors including the cost for customers to switch to a substitute, buyer’s propensity to substitute and price-performance of substitutes.

    Advertising

    2. Threat of Established Rivals

    It considers the strength of the rivalry present in the current industry.There are a number of possible factors including number of competitors, pace of market growth and diversity of competition.

    3. Threat of New Entrants

    It refers to the potential threat posed by newcomers in the industry. It is also known as the barriers to entry as it measures the vitality of new entrants in an industry. Capital costs, branding of existing competitors and requirement of proprietary technology or patents are the major factors influencing the force.

    4. Bargaining Power of Suppliers

    It concerns the ease for suppliers or factor of production to raise prices. For example, the number of possible suppliers and whether they produce homogenous or differentiated products can influence the price to a great extent.

    5. Bargaining Power of Customers

    Advertising

    It considers the ease for customers to push for a lower price. To illustrate, it is more likely for customers to demand a lower price if they purchase a large amount of goods or services. Number of customers and brand name strength also affect the bargaining power of customers.

    The first three forces are from horizontal competition while the remaining are from vertical competition.

    What’s good about the Porter’s Five Forces?

    Every owner and stakeholder of a business has a question in common: how to maximise the profitability?

    By evaluating the industry using the model, we can grasp a clearer picture of the overall environment of the industry. In fact, the model can also be applied to have a better understanding of the current major competitors. Identifying their strengths and weaknesses allows us to devise a better strategy to further boost our competitiveness.

    We can also evaluate the potential of our business by comparing us with other competitors to see if the market has been saturated or not.

    On the other hand, the model tells us on what aspect we are better. Thus, we can put more effort to expand our competitive advantage in order to always stay ahead of the counterparts.

    Besides, after analysing the current and potential future states of the five competitive forces, we can seek to manipulate the forces in our favour. Adjusting the strategy can change the impact of competitive forces on the organization. A proper shift in direction can lead the company to a bright future.

    Advertising

    Anything challenging about the Porter’s Five Forces?

    Despite that Porter’s model may be applied to a lot of good use, it is a little too ideal to look at the industry. The model provides directions to evaluate an industry but such analysis is based on a perfect market assumption. In reality, the market is seldom if not never in such ideal conditions so it is impossible to perfectly evaluate an industry with this model. Instead, the model is only applicable to simple market structures.

    Morever, the model overlooks a sixth force – Complementors. Complementors refer to those who sell products and services that are best used in conjunction with a product or service from a competitor. Intel and Apple are a good example which they are in fierce competition yet there is obvious reliance of each other in the industry. Taking the sixth force in account makes the model more well-rounded.

    Lastly, the model also overlooks the technology component in today’s business world. As the model was proposed back in 1979, influencing power of technology was almost negligible compared to nowadays. Disregarding the technological aspect may render the whole analysis inaccurate. Hence, the factors in digitalisation or globalisation is usually added into the model now.

    When’s the best time to apply the model?

    When is a good time to make the best use of the Porter’s Five Forces Model? For business startups, it is unwise for entrepreneurs to start a company before exploring the profitability of a new entrants in the industry. In that case, the model can come in handy to analyse the market before putting in effort and investment.

    Also, the model can be a good tool for an operating businessto fine-tune its strategies for better growth. It is especially useful when the business is experiencing stagnant progress and has no clues where goes wrong. The model may provide the answer for the dissatisfaction.

    Here we demonstrate how the Porter’s Five Forces Model can be used to evaluate a business. Two world-renowned business, Facebook and Nike, are chosen.

    Example 1: Facebook

    Advertising

    The social networking market is significantly competitive and is constantly under rapid changes. Due to frequent introduction of new technologies, Facebook has to cope with the situation by continuous innovation and adaption to the ever-changing environment. Besides, the social networking market is unlike other market for its ease to enter the industry.

    Consequently, increased number of competitors intensifies the competition further, making the Threat of New Entrants and Established Rivals greater. Lastly, as the mobile market is emerging while the switching cost for users from computer to mobile is low, the Threat of Substitution is also great.

    Example 2: Nike

    The Threat of Established Rivalry is the major worry for Nike, as there is established as well as upcoming counterparts in the market. The low barrier to entry also poses a big threat to Nike as the large number of competitors will significantly impact the profitability. If Nike is unable to adapt to the customers’ trends, the growth can be severely impacted or even recorded in negative digits.

    Besides, the Bargaining Power of Customers is also worth consideration as the wholesaler can request for greater discounts for their tremendous demands.

    Featured photo credit: Flaticon via flaticon.com

    More by this author

    Jeffrey Lau

    Editor. Sport Lover. Animal Lover.

    How I Get More Job Offers Than Others By Writing a Thank You Email How to Think Positive Every Day A Dull Resume Can Kill Your Job Chances, Here’s How You Can Write an Appealing One The Secret to Effective Conflict Resolution: The IBR Approach 20 Most Fun Jobs in the World (That Also Pay Well)

    Trending in Work

    1 7 Effective Ways To Motivate Employees in 2021 2 How To Stay Motivated As You Build Your Business 3 15 Smart Video Conferencing Etiquette Tips to Follow 4 23 Tips for New Entrepreneurs to Get Your Business Underway 5 20 All-Time Best Entrepreneur Books to Make Your Business Successful

    Read Next

    Advertising
    Advertising

    Published on July 27, 2021

    15 Smart Video Conferencing Etiquette Tips to Follow

    15 Smart Video Conferencing Etiquette Tips to Follow
    Advertising

    During the pandemic, video conferencing replaced in-person meetings and has now become the standard option for business meetings. Over the past 17 months, most workers have gotten past the video conferencing learning curve with Zoom or Microsoft Teams (or their platform of choice).

    But just as with in-person meetings, attention can wax and wane. Some say we’re just not used to staring at ourselves so much on the screen. Instead of fixating on that, try employing smart video conferencing etiquette, or you may risk indiscretions that will flag you as a slacker.

    Put the Pro in Professional

    After more than a year of fine-tuning, here are the new rules of video conferencing etiquette.

    1. Mute Your Mobile and Other Devices

    The first video conference etiquette you need to know is muting your other devices. Just as in the pre-COVID days, someone’s obnoxious ring tone blaring Taylor Swift’s newest single in the middle of a meeting is also an annoyance if it happens during a Zoom meeting and so is the inevitable fumbling to turn off the sound. Even the apologies to the group get tiresome.

    Also, when notifications are activated on the computer that you’re using for the meeting, the incoming message takes over the audio and you’ll miss out on snippets of the conversation. Be sure to eliminate this possible faux pas.

    2. Dress the Part

    While working from home, you may have fallen into the habit of slipping on your comfiest T-shirt each day. Hey, no judgments! But before you log on to your video conference, try to make an effort with your appearance.

    Depending on your company culture and the importance of your meeting, consider dressing the part of the professional whom you wish to project. It will help you feel more self-assured, and others will likely take you more seriously.

    For women, wear light make-up, put on earrings, and make sure your blouse is crisply pressed. For men, show up freshly shaved. Wearing a crisp collared shirt in a solid color will usually suffice.

    Advertising

    Pro Tip: Stay away from wearing white or black, unless those colors look great on you. Consider wearing light blue or brown instead.

    3. Stage Your Workspace

    Have you noticed the backdrops of experts interviewed on news shows? Bookshelves and photographs are carefully curated, and no busy-patterned furniture or artwork is in sight.

    Take note of what appears behind you when you choose the location of your video conferences. Piles of junk mail on the table or stacks of folded laundry on the couch will convey more about your personal life than you care to share. Make sure you remove clutter from the camera’s eye, and present a tidy, orderly workspace to your colleagues, coworkers, and bosses.

    4. Put Some Thought Into Lighting and Perspective

    Be aware that in a video conference, your computer camera can actually make you look up to ten pounds heavier depending on where you sit. But you can easily drop those added pounds by moving back from the screen to diminish the wide-angle distortion.

    Frame your head on the screen by tilting the screen up or down. Also, it’s best to not place yourself in front of a window or bright light, which makes you appear in shadow. Instead, face the light source, moving it (or yourself) until you have a flattering amount of illumination. You can also purchase some small spotlights that allow you to add light as needed.

    Pro Tip: If your lights add too much redness to your skin, consider counter-balancing with a green filter.

    Remember That Half of Life Is Showing Up

    5. Arrive on Time

    In the old days of in-person meetings, it was nearly impossible to slip in late into a meeting unnoticed. In today’s video conferences, logging in late still shows poor form. Instead, strive to arrive five minutes early and get yourself settled.

    Once the meeting is underway, the host may be less attentive about late arrivals waiting to be let in. Diverting the host’s attention away from the meeting with a tardy entry request is the ultimate giveaway that you didn’t honor the schedule. If you don’t want a black mark against you, log in on time.

    Advertising

    6. Turn on Your Video

    Few people like to see their face on the screen, but buck up and turn on your camera in video conferences. In most cases, it’s better to be a face on a screen than a name in a blank square. Your statements will be more memorable when other meeting attendees can see you.

    If you need to turn off the video, either because of a poor connection, some commotion in the room, or a need for a quick break, give a short explanation via the chat feature. Then, go back on video as soon as you’re able.

    Pro Tip: Keep your explanation for your departure pithy. “Sorry! Doorbell rang. Back in five” says it all. Be sure to honor what you say in chat and really do return in five minutes.

    7. Plan Ahead Before Sharing Your Screen

    Don’t be one of those people who makes everyone else wait as you click through folders in search of a document. That’s just poor video conferencing etiquette. If you know you’ll need to share a document or video on your screen, prepare by pulling it out of its folder and onto your desktop. Also, clean up the files and folders on your desktop to reduce clutter and facilitate easy access. Close other programs like chat, calendar notifications, and email. Disable pop-up notifications to ensure there’ll be no unforeseen distractions.

    Be sure to remind the host before the meeting that you’ll need them to activate the screen-sharing function. Show courtesy once you’re finished by hitting “stop share” to return to the screen with participants.

    Attend to the Pesky Details

    8. Make Sure That Meetings Remain Right-Sized

    With the easy accessibility of video conferencing, it can be tempting to extend the meeting invitation beyond the core group and include everyone peripherally involved in a project. But just as with in-person meetings, the more people involved, the more unwieldy the meeting becomes.

    Use good judgment when asking others to sit through a video conference so that you don’t needlessly take up others’ time and so that participants can be fully engaged.

    9. Remember to “Unmute” Before You Speak

    Most of us are likely able to count on one hand the number of video conferences when someone didn’t have to be reminded, “You’re on mute!” Forgetting to unmute before speaking has become one of the most common missteps in video conferencing.[1]

    Advertising

    Show everyone your impeccable video-conferencing poise by managing your mute feature with flawless control.

    10. Stay on Point to Keep the Meeting Length in Check

    As with in-person meetings, an agenda with assigned time limits for discussions remains necessary to keep a meeting focused. Data shows, however, that video conferencing can actually reduce meeting time.[2] Reasons include the elimination of commuting time and the ability to screen share and annotate to keep everyone on task.

    Additionally, side conversations are virtually impossible with video conferencing now that you can no longer have back-and-forth exchanges with the person beside you.

    Pro Tip: If you’re running the meeting, let attendees know in advance the protocol for the chat feature. Is it okay for them to “chat among themselves” or not? (See point 11, as well.)

    Talking Has a Time and a Place

    11. Chat Appropriately

    Just like side conversations or texting in an in-person meeting, the use of the chat feature during a video conference can be disrespectful unless it’s directed to all participants. Hence, it’s good video conferencing etiquette to mind your use of the chat.

    At the start of the meeting, you may want to ask the host if it’s alright for participants to use the chat feature. This allows them to disable it if they choose. Used appropriately, it can be a helpful tool to clarify or amplify an earlier point once the conversation has moved on or to let the group know that you need to sign off early (and why).

    12. Use the “Raise Hand” Feature to Avoid Interruptions

    The slight lag in many video conferences can result in speaking over another person if you attempt to jump into a conversation. To avoid this awkward interruption, indicate when you have something to add to the discussion with the raise-your-hand feature that signals the host you would like to speak. This effective meeting management device makes video conferencing run more smoothly, especially with a large group, but it must be activated and monitored by the host.

    Pro Tip: For meetings of six to ten people, sometimes the old-fashioned raising of your physical hand may be the best option. But it’s up to the meeting host. Ask them what they would prefer, and follow that.

    Advertising

    13. Don’t Record the Session or Take Photos Without Prior Permission

    In this case, not sharing is caring. The “sharing culture” made popular through social media has little place in video conferencing. Before recording a meeting or capturing a screenshot of the participants, always ask for consent in advance from the full roster of attendees. Knowing that a video conference will be photographed or recorded could have a bearing on what others are willing to discuss.

    Manage Yourself

    14. Minimize Distractions

    While de-activating audio and video features can keep distractions from affecting the other participants, you will need to manage noise and disruptions on your end to give your full attention to the meeting.

    Move out of high-traffic zones in your home, keep your door closed, and ask family members to be considerate.

    15. Save Snacking for Later

    Save snacking for later—or earlier. Eating while on video conference is a no-no. Munching in front of the group while close to the camera—as you are when video conferencing—subjects the participants to an up-close and (too) personal view of your food consumption process.

    However, it’s perfectly fine to sip quietly from a glass of water or cup of coffee or tea. If the meeting threatens to last for more than two hours, you may want to ask the host in advance to schedule a five-minute break at the halfway point.

    Final Thoughts

    Even though bosses are now beginning to ask workers to spend some of their workdays on-site, up to 80 percent will permit employees to work remotely at least part of the time, which means more video conferencing in your future.[3] Mastering these video conferencing etiquette tips will help you dial in—as well as dial back—your participation and demonstrate your unwavering level of engagement to the team.

    Featured photo credit: Chris Montgomery via unsplash.com

    Reference

    Read Next