Today I have been...
Reading about industry dynamics
Why?
Required reading
So What?
5F model can't distinguish all characteristics of competition in some industries. For example, industry standards in the tech sector means other factors need to be considered.
5F gives a snapshot. But what is the dynamic of the industry?
Examples:- network effects. This is particularly the case in tech sectors. The satisfaction that a user derives increases in line with the number of other consumers of that product. eg Telephone (more usable the more people have them) - a direct effect but also indirect eg ipod, iphone. Sometimes an early lead gained by one product can be self-reinforcing.
The more a product gains prevalence, the more likely it will become an industry standard. In industries subject to network effects, entry timing could be a key competitive advantage.
How will I use it?
Useful knowledge to bear in mind.
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