Startups do well in crowded industries under two conditions: (1) they create meaningful value for customers at a fair price and (2) they differentiate themselves from competitors in ways that create value for customers. Regarding the industry that the startup is entering, diminishing the impact of three of Porter’s five forces rests largely on the factors mentioned previously.

A firm that can withstand rivalry with existing firms, is able to deter substitutes, and is able to discourage new entrants from entering the market by creating value for its customers and by offering them something that they cannot buy from competing firms has a favorable position within an industry or a segment of it.

The following are examples of three businesses that are creating unique value in their industries and differentiating themselves from competitors in a meaningful way. Each industry in which these firms compete is very competitive, yet these companies are growing and thriving.

Kazam Bikes To teach their kids how to ride a bike, most parents choose pedaled bikes with training wheels. While training wheels may seem like the easiest approach, they do not teach kids balance or proper bike steering. A bike with training wheels may even be dangerous because it can tip over if a child turns a corner too quickly or rides on uneven ground. In addition, by not teaching balance, when the training wheels come off, a child has yet to learn the most important part of riding a bike.

Kazam bikes offer a quick, safe, and enjoyable alternative. They are pedal-less bikes that kids propel with their feet on the ground (like a skateboard, but they use both feet). When they build up enough momentum to coast, they pull their feet off the ground and rest them on a patented foot platform. The advantage to this approach is that the bike teaches balance and steering. When a child lifts the feet off the ground and places them on the foot platform, they must maintain proper balance and center of gravity, similar to riding a traditional bike. Kazam bikes teach coordination and balance and prepares kids to ride pedaled bikes safely.

The Kazam bike is designed for three- to six-yearolds, which is the age of most kids when they learn to ride a bike. While there are other balance bikes on the market, the Kazam bike is the one with the patented footrest designed to teach perfect balance. Other balance bikes have foot pegs or require kids to drag their feet on the ground. The Kazam bike has several nice design features.

The seat releases quickly so people can adjust it easily as a child grows, and the handlebars adjust forward and backward as well as up and down. The bike has a classy look and is available in several colors. Along with its balance bike, Kazam sells a pedal bike, which is the next step up for a child trained on the balance bike......

Discussion Question:

1. What are the common attributes across the three companies in this feature? How do these attributes help the companies thrive in competitive industries?
2. In what ways do each company’s features redefine the customer experience in its industry?
3. Of the three companies featured, which one do you think will have the most profound impact on its industry? Describe what you think the impact(s) will be.
4. Find an example of another company that is thriving in a highly competitive industry. Complete an analysis of the company to discern what sets it apart from competitors.