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How Not to Start from Zero for New Startups

How Not to Start from Zero for New Startups

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.

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    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

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    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.

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    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

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    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

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    Jeffrey Lau

    Editor. Sport Lover. Animal Lover.

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    Last Updated on February 11, 2021

    10 Secrets of Making Every Presentation Fun, Engaging, and Enjoyable

    10 Secrets of Making Every Presentation Fun, Engaging, and Enjoyable

    Not a lot of people are good at public speaking. You could even say that virtually everyone needs to get some practice, and preferably good guidance, before they can learn to stay calm when facing a room full of people. Having all eyes on you is an uncomfortable experience and it takes time to get used to. However, even if you can manage to control your stage fright and stay focused, it doesn’t necessarily mean that your presentation won’t put people to sleep. This is usually the case with long presentations on a very dull subject, with the presenter speaking in a monotone voice and dimming the lights to play a PowerPoint presentation.

    You have to work hard to develop the right skills

    If you want to be remembered and actually get people engaged, you need to make your presentation fun and enjoyable, without coming off as corny or desperate to please. I know, it doesn’t sound that easy at all! A good presentation during a promotional event or given to an important client can be a game changer for your business, so it is easy to get stressed out and fail to perform all that well. Luckily, giving an interesting lecture is something that can be practiced and perfected. There is plenty of advice out there on the topic, but let’s look at the most important aspects of giving a memorable and fun presentation.

    1. Make your presentation short and sweet

    With very long, meandering speeches you tend to lose the audience pretty early on, and from then on out it’s just a test of endurance for the few bravest listeners. Not only will people’s attention start to drop rapidly after sitting and listening to you talk for 30 minutes, but you also risk watering down your core ideas and leaving your audience with little in the way of key phrases and important bits of information to take away from the whole ordeal. Famous speakers throughout history have known the importance of condensing the information by using well thought out sentences and short phrases loaded with meaning.

    JFK’s famous: ”It’s not what your country can do for you, but what you can do for your country,” expresses so much in very few words and gets the audience thinking. Ancient Spartans, for example were famous for their quick, dry wit, often demolishing their opponent’s argument with a single word or phrase. You’ll want to channel that ancient spirit and be as concise as possible when preparing your presentation.

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    2. Open up with a good ice breaker

    At the beginning, you are new to the audience. There is no rapport, no trust and the atmosphere is fairly neutral. Even if some of the people there know you personally, the concept of you as an authority on a particular matter giving a speech will be foreign to them. The best way to encourage a warm and friendly atmosphere is to get some kind of emotional response out of the audience right at the beginning. It doesn’t matter what emotion it is, you just need to connect with them on a more personal level. It can be shock, curiosity, laughter, knowing smirks, nervousness – whatever gets them out of that initial feeling of indifference. There are different kinds of effective ice-breakers, but generally speaking, the most successful ones utilize one of these tactics:

    • Joking
    • Tugging on their heart strings
    • Dropping a bombastic statement
    • Telling an interesting and relevant anecdote
    • Using a metaphor or drawing comparisons

    You can make a small, self-deprecating comment, stir the presentation one way and then suddenly surprise the audience, use sarcasm, open up with a short childhood story that taught you a lesson, quote a famous person and elaborate on it from personal experience, use an inspirational anecdote or hit them with a bit of nostalgia. Just remember to keep it short and move on once you’ve gotten a reaction.

    3. Keep things simple and to the point

    Once you’re done warming up the crowd you can ease them into the core concepts and important ideas that you will be presenting. Keep the same presentation style thoughout. If you’ve started off a bit ironic, using dry wit, you can’t just jump into a boring monologue. If you’ve started off with a bang, telling a couple of great little jokes and getting the crowd riled up, you have to keep them happy by throwing in little jokes here and there and being generally positive and energetic during the presentation. You need a certain structure that you won’t deviate too far from at any point. A good game plan consists of several important points that need to be addressed efficiently. This means moving on from one point to another in a logical manner, coming to a sound conclusion and making sure to accentuate the key information.

    4. Use a healthy dose of humor

    Some of the best speeches and presentations in the world, which have been heard and viewed by millions, all feature plenty of humor. No matter the subject, a great speaker will use natural charisma, humor and beautiful language to convey their points and get the crowd excited about what they are saying. A great example of building rapport with the audience through the use of humor is Barrack Obama talking about the government building Iron Man.

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    It is silly and fun, and absolutely not something that you would expect from a man in a position of power speaking in such a serious setting – and it’s exactly why it works. The more serious the situation and the bigger the accent on proper social behavior, the harder your jokes will hit.

    5. Try to tell a story instead of ranting

    Some people can do all of the above things right and still manage to turn their short and fun little presentation into a chaotic mess of information. You don’t want your speech to look like you just threw a bunch of information in a blender in no particular order. To avoid rambling, create a strong structure. Start with the ice breaker, introduce the core concepts and your goals briefly, elaborate on the various points in a bit more detail, draw logical conclusions and leave your audience with a clear takeaway message. You want to flow naturally from one part to the next like you are telling a big story chapter by chapter.

    6. Practice your delivery

    Standing in front of the mirror and practicing a speech or presentation is a technique as old as mirrors – well, come to think of it, as old as human speech, since you can see yourself reflected in any clear and calm body of water – and that means that it is tried and true. The theory is incredibly simple, yet the real problem is actually putting in the effort day in and day out. Work on your posture, your tone of voice, accent, pauses between sentences and facial expressions. The most important thing is to talk slowly and loudly enough to be heard and understood clearly. Many famous speakers, such as Demosthenes and King George VI, overcame speech impediments through hard work.

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    7. Move around and use your hands

    Although you won’t instill confidence in your project if you are very jittery, moving around erratically, not knowing what to do with your hands and making fast movements, standing dead still can be just as bad. You shouldn’t be afraid to use your arms and hands when talking as it makes you seem more passionate and confident. The same goes for moving around and taking up some space. However, try to make slower, calculated and deliberate movements. You want your movements to seem powerful, yet effortless. You can achieve this through practice.

    8. Engage the audience by making them relate

    Sometimes you will lose the audience somewhat in techno-babble, numbers, graphs and abstract ideas. At that point it is important to reel them back in using some good, old-fashioned storytelling. Make comparisons to events from everyday life that most people are more than familiar with. By making things look simple, not only will you help your audience get a better understanding of the subject by enabling them to visualize the information more clearly, you will also draw a connection between you. After all, you are all just regular people with similar experience, you just happen to be performing different roles at the moment.

    9. Use funny images in your slides

    Although slides are not really necessary at all times, if you do need them to make your point and present your information more effectively, it’s best to liven them up. They say that facts aren’t always black and white, and your presentation should reflect this. Add a bit of color, make the information stand out and use an interesting animation to switch from slide to slide. You can use the slides to add some more humor, both in terms of the text and the images. An image that is used to elicit a positive response needs to be funny within the context of what you are discussing. For example, if you are discussing the topic of authority, an image of Eric Cartman from South Park in a police uniform, demanding that you respect his “authoritah,” is a nice way to have a bit of fun and lighten things up.

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    10. End on a more serious note

    When all is said and done you will want the audience to remember the core concepts and keep thinking about what you have said after the presentation is over. This is why you should let things naturally calm down and end with an important idea, quote or even a question. Plant a seed in their mind and make them think. Let us turn to Patrick Henry for a great way to end a speech: “Is life so dear or peace so sweet as to be purchased at the price of chains and slavery? Forbid it, Almighty God! I know not what course others may take; but as for me, give me liberty or give me death.”

    As you can see, there is quite a bit to learn when it comes to giving a good presentation, one that is both memorable and fun. Be sure to work on your skills tirelessly and follow in the footsteps of great orators.

    Featured photo credit: Austin Distel via unsplash.com

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