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Conducting anConducting an
Industry AnalysisIndustry Analysis
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Seven Questions for Industry AnalysisSeven Questions for Industry Analysis
1. What are the industry dominant economic traits?1. What are the industry dominant economic traits?
2. What competitive forces are at work in the industry and how2. What competitive forces are at work in the industry and how
strong are they?strong are they?
3. What are the forces of change in the industry and what impact3. What are the forces of change in the industry and what impactwill they have?will they have?
4. Which companies are in the strongest/weakest competitive4. Which companies are in the strongest/weakest competitive
position ?position ?
5. Whos likely to make what competitive moves next?5. Whos likely to make what competitive moves next?
6. What key factors will determine success or failure?6. What key factors will determine success or failure?
7. How attractive is the industry in terms of its prospects for7. How attractive is the industry in terms of its prospects for
above average profitability?above average profitability?
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Q1. What are the industryQ1. What are the industry
dominant economic traits?dominant economic traits?Market size (Global & Indian Scenario)Market size (Global & Indian Scenario)
Scope of competitive rivalryScope of competitive rivalry
Market/industry growth rate (life cycle)Market/industry growth rate (life cycle)
Fast growth breeds new entry; slowdowns lead to increasedFast growth breeds new entry; slowdowns lead to increasedcompetition.competition.
Number of rivals and their sizeNumber of rivals and their size
Number of buyers and their sizeNumber of buyers and their size
Level of backward and forward integrationLevel of backward and forward integration
Technological change (rate and scope)Technological change (rate and scope)
Level of differentiation between firms productsLevel of differentiation between firms products
Opportunities foreconomies of scaleOpportunities foreconomies of scale
Ease ofentry and exitEase ofentry and exit
Capital requirementsCapital requirements
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Q1: Industrys Dominant Economic TraitsQ1: Industrys Dominant Economic Traits
MarketMarket
SizeSize
ScopeScope
Growth rateGrowth rate
Growth cycleGrowth cycle
size of competitorssize of competitors
Distribution channelsDistribution channels
ProductProduct
DifferentiationDifferentiation
Potential forPotential for
economies of scaleeconomies of scale Entry / exit costsEntry / exit costs
TechnologicalTechnological
changechange
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Q2. What competitive forces are at work inQ2. What competitive forces are at work in
the industry and how strong are they?the industry and how strong are they?
The rivalry among sellersThe rivalry among sellers
Gr eater the rivalry, lower the avg. profitabilityGreater the rivalry, lower the avg. profitability
What causes rivalry to be strong or weak?What causes rivalry to be strong or weak?# of competitors# of competitors
Size / capability of competitorsSize / capability of competitors
Financial status of competitorsFinancial status of competitors
Slow growthSlow growthCost ofexit barriersCost ofexit barriers
Switching costs for customersSwitching costs for customers
Variability in demandVariability in demand
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Q2. What competitive forces are at work inQ2. What competitive forces are at work in
the industry and how strong are they?the industry and how strong are they?
Potential new entrantsPotential new entrants
Barriers to entryBarriers to entryEconomies of scaleEconomies of scale
Customer loyalty / brand preferencesCustomer loyalty / brand preferences
Resource / investmentResource / investment
Access to distributionAccess to distribution
RegulationRegulationPatents, proprietary technologyPatents, proprietary technology
Level of industry profitsLevel of industry profits
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Q3. What are the forces of change in theQ3. What are the forces of change in the
industry and what impact will they have?industry and what impact will they have?
The most dominantThe most dominant
forces the cause theforces the cause the
industry to change areindustry to change are
calledcalled drivingdrivingforcesforces Common DrivingCommon DrivingForcesForces
Changes in long term industryChanges in long term industrygrowth rategrowth rate
Changes in who buy the productsChanges in who buy the productsand for what reasonand for what reason
Product innovationProduct innovationTechnological changeTechnological change
Marketing innovationMarketing innovation
Increasing globalizationIncreasing globalization
Regulatory changesRegulatory changes
Changing societal concerns,Changing societal concerns,
attitudes and lifestylesattitudes and lifestyles
Environmental scanning
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Q5. Whos likely to make whatQ5. Whos likely to make what
competitive moves next?competitive moves next?
In order toIn order to
outmaneuver youroutmaneuver your
competition you havecompetition you have
to evaluate theto evaluate thecompetitors futurecompetitors future
moves.moves.
Identify competitorsIdentify competitors
strategiesstrategies
Evaluate who are theEvaluate who are the
major playersmajor players---- nownow
WhoWho will bewill be the majorthe major
playersplayers
Evaluate what theEvaluate what themajor players aremajor players are
going to dogoing to do
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Q6.Q6. What key factors will determineWhat key factors will determine
success or failure?success or failure?
Key success factors (KSF)Key success factors (KSF)are crucialare crucial
elements that lead to success.elements that lead to success.
What are they now? What will they be?What are they now? What will they be?In beer production KSF can be brewingIn beer production KSF can be brewing
skillsskills
In retail apparel KSF can be low cost,In retail apparel KSF can be low cost,superior service, superior designsuperior service, superior design
In your industry, KSF=????In your industry, KSF=????
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Q7. How attractive is the industry in terms ofQ7. How attractive is the industry in terms of
its prospects for above average profitability?its prospects for above average profitability?
Growth potentialGrowth potential
Driving forcesDriving forces
Entry/exitEntry/exit
Stability of demandStability of demand
Competitive forcesCompetitive forces
Risk and uncertaintyRisk and uncertainty
Competition and itsCompetition and itsimpact on the industrysimpact on the industrys
futurefuture
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SWOT AnalysisSWOT Analysis
Identify theIdentify the
StrengthsStrengths
WeaknessWeakness
OpportunityOpportunity
ThreatsThreats
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