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Chapter 2. Identifying Valuable Opportunities > Changes in Industry Structure

Changes in Industry Structure

Another type of change that is a source of entrepreneurial opportunities is change in industry structure. Sometimes, industry structure shifts because firms that supply other firms or major customers die or because firms merge or acquire each other. These types of shifts change the competitive dynamics in an industry and open up or close down niches that may provide opportunities for entrepreneurs. For instance, as the airline industry consolidated based on the hub and spoke design that major airlines use, opportunities for entrepreneurs to enter and create new airlines that fly point-to-point began to occur. The shift to the hub and spoke approach alone was not sufficient to create an opportunity for new firms to enter; it was the combination of the change in the air travel industry combined with firm exit that generated this business opportunity.

Stop! Don’t Do It!

  1. Don’t start a business without first identifying the source of opportunity for it.

  2. Don’t start a business unless you understand how technological, political, regulatory, social, demographic, or industrial change created an opportunity for it.



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