Forces That Affect Businesses

Forces that affect businesses were inspired by a former CEO of Intel, Andrew Grove. In his book, “Only the Paranoid Survive”, he talked about inflection points which many businesses will face.

Inflection Point in this sense simply means the point at which a curve takes a turn from positive to negative and vice versa. A lot of times, some CEOS are stuck in their ways and aren’t able to adapt to changes when they happen. The companies that survive not only adapt, they also have the ability to anticipate changes before they occur and take appropriate actions.

These forces that affect businesses:

Existing Competitors
Do your competitors have you in their radar? Are they well-funded? Clearly you want to be in a position to dominate.

Suppliers
Does your business have a lot of suppliers so you’ll have plenty of options? Or do you depend one that might get greedy and no longer be guided by your long term interests.

Potential Competitors
Even though they’re not in business today, they can decide to come in and compete. They may be more competent, have more resources and more aggressive towards gaining market share than the existing competitors. Do you have a plan if and when this happens?

Customers
Do you have lots of customers or is your business dependent on a few? This means you should always be looking to grow your customer base whether it’s by promoting or through word of mouth. Let’s face it, you won’t be in business for long if you’re not able to at least replace existing customers with new ones if they stop doing business with you.

Substitution
How easy is it to replicate and replace your business model? This force is the most ferocious of all. This is how digital media is taking over the entertainment industry. The possibility that your product or service can be built and delivered in a more efficient way leaves you vulnerable. This doesn’t necessarily mean you have to compromise your brand just to be in business. Instead, you have to adjust and keep up with technology as things change.

Complementors
Do other businesses depend on your product or service? Your business is in good shape if it works complementary with other products. For example, cars need fuel; fuel needs gas powered cars. Computers need software; software needs computers and so on. When your business is complimentary to other businesses, both interests are aligned and the products and services assist each other.

Whether you’re just starting out to build or if you’ve been in business for numerous years, you must pay close attention to these forces that affect businesses. “So if you stay ready, you ain’t gotta get ready.” – Will Smith

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