Business Analysis Framework

To understand a business, you need to understand:

  • Customers
  • Economics
  • Competition
    • What determines market prices?
    • What determines profits?
      • Use Porter's five forces model to analyze the factors that determine industry profits and see how the internet has affected them
    • What is the strategy to deal with competitors?
      • There are two basic strategies: achieve cost leadership (so you can still make money at the market price) or differentiate (what can you do that others cannot?)
  • The business model combines many of these questions
    • Why will people buy?
    • Why will the business be profitable?
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