3 Page Industry Analysis

3 Page Industry Analysis

Industry Analysis (3+ full content pages) Remember, this is an industry analysis not a company analysis. Therefore, limit the amount of specific

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company (organizational) information.

 

A. Basis description of the industry. Will include, as a minimum:

1. The nature of the product or service

2. Information about customers and channels of distribution

3. Size of the industry (sales)

4. Geographic location of the industry

5. Profit trends

6. Competitive nature of the industry

 

B. Factors that influence demand. These factors may cause demand to increase or decrease. For each factor that you discuss, indicate whether it will cause demand to increase or decrease. You should demonstrate an understanding of why customers buy the product or service (e.g., customer service, quality, cost to name only a few). Also include:

 

1. The functions served by the product/Why customers buy the products or services

2. Stage of the product life cycle

3. Economic trends

4. Demographic trends

5. Social/cultural trends

6. Political trends

7. Technological trends

8. Programs developed by companies in the industry (new marketing programs, new distribution channels, etc.)

9. Pricing actions/trends (how do competitors us price as a competitive weapon, etc.)

 

C. Factors that influence cost structures and profitability

 

1. Stage of the product life cycle. (Stage of the product life cycle affects pattern of investment, cash flows, and profitability.)

2. Competitive environment. Thoroughly analyze and discuss Porter’s Five Forces of Industry Competition. Explain effects on costs and profitability.

3. Cost drivers. Describe the major cost drivers or identify what contributes to the price a company must charge for its product or service (e.g., labor, material, manufacturing). Give percentages or other data if available. Also, discuss the value chain as it relates to cost.

 

D. Opportunities in the industry. Using your analysis of the industry, prepare a thorough list of opportunities in the industry. For example, weak competitive rivalry would be an opportunity in the industry. Be sure to explain why each is an opportunity for the industry. Examples may include:

 

1. Serving additional customer groups/expanding into new markets

2. Expanding the product line

3. Integrating forward or backward

4. Complacency among rival firms

5. Strong increase in market demand

6. Favorable demographic, social, cultural, technological trends

 

E. Threats in the industry. Using the industry analysis completed to this point, prepare a thorough list of threats in the industry. For example, a strong competitive rivalry would be a threat in the industry. Be sure to explain why each is a treat to the industry. May include:

 

1. Entry of lower-cost foreign competitors

2. Rising sales of substitute products

3. Slower market growth

4. Adverse shifts in foreign exchange rates or trade policies

5. Adoption of new governmental regulations affecting the industry

6. Strong bargaining power of customers or suppliers

7. Changing buyer needs or tastes

8. Adverse demographic, social, cultural, technological trends