When I have mentioned elsewhere in other blogs and articles, I have faith that scientific studies are a vital element of good business and decision-making. Indeed, a strategic business plan is useless without solid research to assist statements and commentary on markets and also the industry that you operate. In addition, it is not easy to assume strategy formulation with no knowledge of your industry. Here is a further thought: What industry are you currently in? I leave this along with you at the moment!
All of us bandy round the term ‘industry analysis’, but what exactly is it, and just what should a great industry analysis report contain?
Questions clarified by a business analysis include:
– Do you know the industry dominant economic traits?
– What competitive forces are in work in the market and just how strong could they be?
– Do you know the forces of change in the market and just what impact can they have?
– Which information mill within the most powerful/weakest competitive position?
– What important aspects determines failure or success?
– How attractive may be the industry when it comes to its prospects for excellent profitability?
Industry Analysis Outline
Getting identified the questions which needs to be clarified by a business analysis, the list below offers an outline from the report:
o Relevant governmental or ecological factors
o Economic indicators relevant for that industry
– Porter’s Five Forces
o Threat of recent entrants
– Economies of scale
– Capital needs
– Proprietary product variations
– Absolute cost advantages
– Brand identity
– Use of distribution
– Expected retaliation
– Supplier concentration
– Existence of substitute inputs
– Differentiation of inputs
– Need for volume to supplier
– Impact of inputs on cost or differentiation
– Threat of forward or backward integration
– Use of capital
– Use of work
– Buyer concentration versus industry concentration
– Buyer switching costs
– Buyer information
– Threat of backward integration
– Survive (utilization of intermediaries)
– Brand identity of buyers
– Cost sensitivity
– Cost to total purchases
o Substitute products
– Relative cost/performance relationship of substitutes
– Buyer tendency to substitute
– Amount of concentration and balance among competitors
– Diversity among competitors
– Industry rate of growth (past and forecasted)
– Fixed costs/useful
– Intermittent overcapacity
– Product differentiation
– Development of foreign competition
– Corporate stakes
– Exit barriers
o Critical success factors
o Prognosis – the assessment for the future with this industry
o Industry ratios
o Other relevant indices
o Other relevant data
Clearly, not every these sections are relevant for those industries, however it does provide a broad outline from the likely contents.
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