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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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