How to Turn Market Threats into Profitable Opportunities


How often do you take time out of the day-to-day of running your business to take stock of the changes in your marketplace? Some of us may attend an annual conference or read the industry press which will, from time to time, remind us of the changes that the industry is currently undergoing such as new entrants, acquisitions and new products or services offered by your competitors. Although the news can sometimes be hard to swallow, often it can also be reassuring


The key question to ask yourself is ‘Do you have a clear enough view of your local market that enables you to respond appropriately?’  For example, you hear that a new entrant is opening up locally. What should you do, if anything?


Taking a structured approach to your market

Having a good model to help you think through the implications of external changes can be very helpful. One of the strategy models we cover on the Business Growth Programme is Michael Porter’s five forces. This model looks at every market by posing five key questions:

  • What is happening in your market (how concentrated is it, how ruthless is the competition and is this reflected in price, is it consolidating, etc?)
  • What is happening to your customers (how many are there, what are the pressures on them, what are their key drivers, etc?)
  • What is happening to your suppliers (are they consolidating, how much power do they have, are there any shortages e.g. of staff that would increase your costs?)
  • Are there any substitutes to your service (can customers fulfil their needs through alternative means, e.g. can customers now go to non-vet suppliers of medicines on the internet, will there be deregulation of some products/services etc?)
  • What is the threat of new entrants (are there significant barriers to entry and what are they in your local market, what is the picture across the UK?)




Considering your business from these perspectives can help you to make a structured and objective evaluation of how you compete in your market and how you can constructively respond to the five forces that will determine your success or failure.

Read: Four proven strategies for entrepreneurial success


Deciding how to respond to changes in the market

As you work through the five forces for your market, you can begin to investigate what the market looks like now and how the key winds of change are pushing it. Doing this will give you some idea of where the market is heading.

Another useful tool for understanding how external factors affect your business is PESTLE. For instance, you will already recognise how the internet has given high levels of transparency to pricing, and how Brexit is creating uncertainty around exporting. Understanding what the next change that you need to respond to is the first step to determining the appropriate response.


The PESTLE method will encourage you to consider the following external factors:

  • Political
  • Economic
  • Social
  • Technological
  • Legal/regulatory
  • Environmental


Working through these models for your own circumstances in your own market will help you think about what the right responses are at both tactical and strategic levels, so you can decide what the right way forward is. Sometimes radical solutions are adopted, and sometimes just small tweaks. It can be helpful to look at what can create a barrier to entry in your market and other tactics you can use to build power.

Gaining clarity about how the system works, what is going on in your market and how external factors will affect it going forward are fundamental first steps for making more informed, strategic decisions around how to respond to changes in your market.


Have you got the psychometric traits of a successful entrepreneur? Find out now.


At Cranfield School of Management, we have over 30 years’ experience working with growing businesses and have in depth knowledge of what makes a business successful. Learn more about how we help businesses to achieve their objectives here.


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