Dominant Economic Characteristics

Topics: Economics, Capitalism, Innovation Pages: 2 (274 words) Published: April 19, 2013
Industry’s Dominant Economic Characteristics

Market Size: Annual sales revenue and total volume.

Scope of Competitive Rivalry: Local, regional, international, global

Market Growth Rate: 2-3 percent annually

Stage in Life Cycle: Early development? Rapid growth? Mature.

Number of Companies in Industry: Lots of small companies or few dominant ones. EX: 110 plant locations and capacity of 4.5 million tons. Market shares range from a low of 3 percent to a high of 21 percent.

Customers: How many buyers are there? Do they need large/small orders?

Degree of Vertical Integration: How prevalent is backward (suppliers) and forward integration (distributors, retailers).

Ease of Entry/Exit: Barriers to enter/leave the industry. EX: Moderate entry barriers exist in the form of capital requirements to construct a new plant of minimum efficient size (cost equals $10 million) and ability to build a customer base inside a 250-mile radius of plant

Technology/Innovation: What is the pace of technological change in both productions, process innovation and new products introductions?

Product Characteristics: Goods/services highly differentiated, weakly differentiated or essentially identical? Buyers perceive little real difference from seller to seller?

Scale Economies: What impact does large volume have on – purchasing, mfg, transportation, and marketing?

Experience Curve What is the impact of learning and experience in this industry?

Capacity Utilization: Do you only achieve low cost production efficiency with high levels of capacity? EX: Manufacturing efficiency is highest between 90-100 percent of rated capacity; below 90 percent utilization unit costs run significantly higher

Industry Profitability: Is it above or below the norm? Do profits track the strength of demand for the industry’s products? Impact on prices?
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