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Industry Analysis

Exhibit 3 - Analysis of e-commerce educational tools industry using Porter's five forces


Mindshaker is creating a new industry by establishing its business of one-stop e-commerce shopping for educational tools. Although the new industry overlaps with existing industries such as textbook sales and general e-commerce, management believes customers view Mindshaker as a new value-proposition and, when analyzed in the context of Porter's five forces, Mindshaker is an attractive new business venture worthy of capital investment.

Internal Rivalry

Mindshaker's products and services are in the early stage of the product life cycle with no direct competing products and services. Thus, internal industry rivalry is weak, As other e-commerce textbook providers (see Exhibit 11) learn of Mindshaker, they will most likely change their product and service offerings and cause internal rivalry to increase. This will make entry barriers critical, which are discussed in the next section.

Potential Entrants

Potential entrants include those companies mentioned in Exhibit II as well as any new companies that desire to enter the e-commerce educational tools industry. Because entry is relatively easy and switching costs are nominal, entry barriers will be critical for success, Mindshaker's strategy is to use its first mover position to erect the two key barriers to entry in the industry, brand equity and strong stakeholder relationships. Additional barriers to entry include portal agreements and possibly exclusive supplier contracts.


Substitute products and services include tutors, learning centers, college bookstores and other methods for acquiring educational tools. Mindshaker's focus is not to create different products and compete with substitute products, but rather improve the value delivered to the customer by creating a one-stop virtual shopping alternative.


The power of suppliers varies among the type of educational too) sold. Textbook and study guide suppliers have high power since they are the only source of the textbook. However, pricing discounts are fairly standard and all purchasers of textbooks are in the same position as each other. Suppliers of simulation games are few and fragmented. However, few purchasers also exist, reducing supplier power to a non -threatening level. Lastly, suppliers of CD-ROM interactive tools are numerous and have relatively small power among consumers. As the CD-ROM market further matures, Mindshaker should be able to further negotiate better terms with these suppliers.


The two primary buyers of Mindshaker's products and services are graduate professors and students. Their power is relatively high initially since multiple ways exist to purchase educational tools and switching costs are low, Mindshaker's objective is to attract these buyers to our services and get them accustomed to using our site. Mindshaker will introduce services and programs that increase switching costs. These services will be similar to the way airlines use frequent flyer programs to try and gain loyalty. Mindshaker also plans to train its customers to become "dependent" on our service. Ali these tactics aim to decrease buyer power.

Table of ContentsAppendices
1. Executive Summary
2. Market Analysis
3. Company Description
4. Marketing & Sales
5. Products & Services
6. Operations
7. Management
8. Financials
Initial Programs
Industry Analysis
Management Biographies
Board CV Summaries
Valuation Analysis
Balance Sheets
Income Statements
Competitor Analysis
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