Industry structure is a term which summarizes the barriers
to entry and the competitive landscape of and industry. It comprises of capital
intensity, advertising intensity, firm concentration, and average company size.
It is important to evaluate prior to starting a non-profit to determine the feasibility
of the mission and model.
Capital Intensity is the amount of money needed to start and
compete. This is important for financial planning. Advertising intensity depicts the level of
importance for advertising and branding as in the case of customers preferring
established non-profits. Company size and concentration depicts the level of
resources like money and employees of the competitors and how many competitors
already operate. Competing with a few small competitors is more advantageous
than competing with large competitors.
Industry life cycle relates to stages of development within
a given industry.
Social entrepreneurs should look for growth opportunities,
explore the evolution of the industry and consider the timeliness of new
organizations to enter. The life-cycle is
dependent upon customer adoption of a product or service, in the beginning, middle
or end.
New non-profits perform better in younger industries to
attract more customers while demand is growing. Also, there is less competition and the
playing field tends to be more level allowing the non-profits equal opportunity
to find and serve their niche. There is also little to no dominant design or
standard, allowing for more creativity in the offering and customer loyalty has
yet to become established.
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