Industry Analysis Techniques Quiz

Industry Analysis Techniques

• Industry analysis is a core component of strategic management, offering insights into the competitive landscape and opportunities within an industry.
• It guides firms in identifying key success factors, evaluating industry segment attractiveness, and developing effective competitive strategies.
• Various frameworks provide different perspectives on the industry environment.

Porter's Five Forces

• Porter's Five Forces identifies the competitive intensity and attractiveness of an industry.
• The five forces are:
  • Threat of new entrants: Barriers to entry (economies of scale, brand loyalty, regulations) affect how easily new competitors enter.
  • Bargaining power of suppliers: Suppliers' influence on prices and terms.
  • Bargaining power of buyers: Buyers' ability to negotiate lower prices and better terms.
  • Threat of substitute products or services: Availability of alternatives meeting similar needs.
  • Intensity of rivalry among existing competitors: Determined by the number and size of competitors, product differentiation, and industry growth rate.
• Understanding these forces helps businesses strategize to counter competitive pressures or leverage opportunities.

PESTLE Analysis

• PESTLE analysis examines broader macro-environmental factors impacting industries.
• The factors are:
  • Political factors: Government policies, regulations, and legal systems.
  • Economic factors: Economic growth, inflation, interest rates, and exchange rates.
  • Social factors: Demographic trends, cultural shifts, and consumer preferences.
  • Technological factors: Technological advancements, automation, and innovation.
  • Legal factors: Industry-specific laws and regulations.
  • Environmental factors: Environmental concerns, sustainability, and ecological issues.

SWOT Analysis

• SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis evaluates internal and external factors influencing an organization.
• Used in conjunction with industry analysis to examine how company strengths/weaknesses relate to external industry trends.

Driving Forces Analysis

• Driving forces analysis identifies key factors driving change within an industry.
• This helps understand industry evolution and anticipate future developments.
• Businesses use this to position themselves favorably and adapt to changing market conditions.

Industry Life Cycle

• The industry life cycle outlines the stages of industry development (introduction, growth, maturity, decline).
• Understanding the current stage is crucial for effective strategy formulation.
• The lifecycle stage directly impacts industry attractiveness.

Industry Segmentation

• Industry segmentation divides an industry into segments based on criteria like demographics, product features, geographic location, and price sensitivity.

Competitive Analysis

• Competitive analysis provides an overview of direct competitors within an industry.
• It considers competitive strategies, market share, capabilities, and financial performance of rivals.
• Businesses use this to identify areas for improvement and gain strategic advantage.

Industry Attractiveness

• Industry attractiveness is assessed by considering market size, growth potential, profitability, and competitive intensity.
• Evaluating attractiveness provides insights into market potential and future success prospects.

Value Chain Analysis

• Value chain analysis examines the sequence of activities a company performs for a product/service.
• This helps identify cost drivers and opportunities for value creation.
• Industry analysis can be used with value chain analysis to discover ways a company can increase product/service value compared to competitors.