Industry Analysis

Topics: Competition, Barriers to entry, Competitor analysis Pages: 3 (809 words) Published: March 19, 2014
Industry Analysis

The course is based on the ability of students to define their business, conduct an effective industry analysis, and identify the "key success factory" for firms competing in the industry. Such industry analysis is based on: A. DEFINE THE BUSINESS. The boundary for industry analysis is the markets and products that describe the domain of the industry. Once you understand the business segment that is to be analyzed, identify the capabilities required to participate in that industry, and those competitors that are able to effectively target the same business segments. These four elements set the parameters for understanding and analyzing the industry. As industries like printers, copiers, scanners, and facsimile machines converge, business definitions become more difficult. In industries like computers, consumers are becoming more demanding for customized products and services. B. DESCRIBE THE INDUSTRY STRUCTURE. For each product-market segment, an industry analysis will describe the "five-forces" of competition. 1.A primary force comes customer segments that make up the markets. The size and importance of customers provide the power to negotiate prices and deals that reduce the profitability of the industry. The size and growth of segments determine their potential influence on product development and level of competition. 2.A second force comes from the competitors and their strategies for gaining market share. Each competitor offers a set of products and services that attempts to provide higher value to the product-market segments they address. Strategies can be to provide some combination of higher performance, more fashion and features, higher quality, or lower price. Increased rivalry often leads to price or service competition that can reduce the profitability of the business. 3.A third force comes from the industry suppliers. Industry suppliers often control critical inputs that can affect a firms ability to compete. Access to...
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