NAME KETAN RANA(A3221514005)

SHIKHAR AGGRAWAL(A32215140)

SHREY TIWARI(A3221514088)

PROGRAM BBA LLB(H)

TOPIC INDUSTRAIL ANALYSIS

WHAT IS INDUSTRY?

Economic activity concerned with the processing of raw materials and manufacture of goods
in factories.

WHAT IS ANALYSIS?

A systematic examination and evaluation of data or information, by breaking it into its

component parts to uncover their interrelationships. Opposite of synthesis.

industry analysis

Industry analysis is a tool that facilitates a company's understanding of its position relative
to other companies that produce similar products or services. Understanding the forces at
work in the overall industry is an important component of effective strategic planning.

Industry analysisalso known as Porters Five Forces Analysisis a very useful tool for
business strategists. It is based on the observation that profit margins vary between industries,
which can be explained by the structure of an industry.

The Five Forces primary purpose is to determine the attractiveness of an industry. However,
the analysis also provides a starting point for formulating strategy and understanding the
competitive landscape in which a company operates.

Porters Five Forces Analysis

The framework for the Five Forces Analysis consists of these competitive forces:

Industry rivalry (degree of competition among existing firms)intense

competition leads to reduced profit potential for companies in the same industry
Threat of substitutes (products or services)availability of substitute products
will limit your ability to raise prices
Bargaining power of buyerspowerful buyers have a significant impact on
prices
Bargaining power of supplierspowerful suppliers can demand premium
prices and limit your profit
Barriers to entry (threat of new entrants)act as a deterrent against new
competitors
Industry analysis and competition

Competition within an industry is grounded in its underlying economic structure. It goes

beyond the behaviour of current competitors.

The state of competition in an industry depends upon five basic competitive forces. The
collective strength of these forces determines profit potential in the industry. Profit potential
is measured in terms of long-term return on invested capital. Different industries have
different profit potentialjust as the collective strength of the five forces differs between
industries.

Industry analysis as a tool to develop competitive strategy

Industry analysis enables a company to develop a competitive strategy that best defends
against the competitive forces or influences them in its favour. The key to developing a
competitive strategy is to understand the sources of the competitive forces. By developing an
understanding of these competitive forces, the company can:

Highlight the companys critical strengths and weaknesses (SWOT analysis)

Animate its position in the industry
Clarify areas where strategic changes will result in the greatest payoffs
Emphasize areas where industry trends indicate the greatest significance as
either opportunities or threats

Industry analysis and structure

The five competitive forces reveal that competition extends beyond current competitors.
Customers, suppliers, substitutes and potential entrantscollectively referred to as an
extended rivalryare competitors to companies within an industry.

The five competitive forces jointly determine the strength of industry competition and
profitability. The strongest force (or forces) rules and should be the focal point of any
industry analysis and resulting competitive strategy.

Short-term factors that affect competition and profitability should be distinguished from the
competitive forces that form the underlying structure of an industry. Although these short-
term factors may have some tactical significance, analysis should focus on the industrys
underlying characteristics.
PEST AND SWOT ANALYSIS

Every company in a business has certain frameworks that they follow in order to understand
the market they are catering to. They usually keep on checking the nerve of the market where
they want to focus their products upon. Certain companies carry out field work in form of
market research through which they conduct surveys or employ other techniques by which to
gauge the market needs and trends.

Then there are other analysis methods that allow for a more holistic approach towards
determining trends and then setting strategies. From a strategic managements perspective,
there are certain tools that permit the knowledge of the market and the surrounding
environment in depth, but the most famous ones are PEST and SWOT analysis.

PEST analysis, which many refer to as a deeper approach into the marketing environment
consists of Political, Economic, Social and Technological features of a market. A more
prolonged form of this analysis is called PESTLE, which incorporates the aspect of
Legal and Environmental factors affecting the marketplace.

PESTLE analysis is a detailed view of the environment a business is situated in. It can be
rightly called a birds eye view where a company or an individual tries to ascertain specific
trends of the market from a macroeconomic perspective.

These factors are major determinants of strategic development and define how conducive an
environment is within which a business strives to thrive. Their details are given below:

Political: It accounts for all the influences that a government may have upon the
business environment, including business cycles, the economy at large and individual
business industries. Tax reforms, fiscal policies and trade tariffs form part of this
analysis.
 Economic: This analyzes the economy as a whole and its performance owing to
global trends and long term effects that may be evident. Inflation rates, interest rates,
economic growth, demand and supply trends are all analyzed under this head.

Social: This charts the analysis of cultural trends, demographical determinants, age
distribution etc.

Technological: This analyses the technological trends of the business environment. It

accounts for the rate at which the innovations are occurring and how directly and
indirectly theyre influencing the business youre in.

1. Legal: There are many laws and policies that directly impact the way your business is
run and the decisions that fuel its propulsion. These laws can be social laws, regulatory laws,
certain standards that need to be met and other such laws.

1 Environmental: Your business has effects in the environment it operates in, therefore
you need to analyze in depth what implications your business might be having on it.
On the other hand, the environment also influences your business directly or
indirectly especially the tourism, farming or agriculture business. Therefore these
factors account for the geographical location, weather, climate etc. but are not just
limited to the study of these only.

PESTLE can be rightly called a thorough view on the external environment in which an
organization is operating in.

On the contrary though, SWOT analysis is the analysis on the internal environment of the
company based on its products etc. SWOT tends to be more product/service specific as an
individual or an entity conducts this analysis based on that product/service.

The components of the SWOT analysis are:

1 Strengths: The S in the acronym stands for Strengths. Much to do with the name, it
analyses the companys strengths in line with the product/service and counts the USP
(unique selling propositions) that it has. Strengths of a company or a product make it
stand out when in comparison with their competitors.

1 Weaknesses: The W stands for Weaknesses. It accounts for all the current weaknesses
that the company may have or may be facing and how the product features them. It
gives the company the view from an external standpoint where they can understand
what their areas of lacking and then work upon them to remove them from their
internal environment.

1 Opportunities: O spells out Opportunities. These opportunities are for the company to
gain, master and then derive benefits from. Usually, weaknesses are reflected here
with a strategy to encounter them as opportunities where the company can work upon
itself or the product/service.
1 Threats: Threats, denoted by T take into account the threats that able and potential
competitors pose for the company and its products/services. These also analyze the
barriers to entry and how potential competition can be tackled effectively.

Both these measures give an in-depth view to the company regarding the environment theyre
in or are about to enter and also about the products or the services with which they plan to
enter the marketplace.

Benefits of industrial analysis

The key advantage of accomplishing an industry analysis is that the company managers
obtain a better understanding about the position of their business in the respective sector. This
allows the businesses to spot themselves vigilantly in the specific industry where they can
serve a niche market or proffer a particular product/service that provides them a benefit over
competitors. The analysis is also helpful to the companies respond in a better way to changes
in the industry.

Importance of industry analysis

The industry analysis is an important element of a business plan. It is important for the
business owners to understand the industries in which they operate to guarantee unrelenting
success. The financial health of a company is generally an indication of the companys health.
Therefore, by carrying out an industry analysis, the business owners can form a strategy
which is more likely to assist the business in growth and success. Moreover, industry analysis
is helpful for the planners in positioning their business in the niche market for the products
and services offered by them.
Another reason indicating the importance of industry analysis lies in the fact that it aids the
companies in recognizing the potential opportunities for the business to develop, in addition
to threats that could be an obstacle in the growth of the company. Being capable of
congregating requirement of a consumer, which is else wise undeserved, may be an
opportunity. Conversely, high capital costs or strict government rules on exports and imports
can be considered as examples of probable threats in different industries.
 The steps necessary for conducting a thorough industry analysis.

1. Getting Ready
Conducting detailed research is the first step in an industry analysis. Generally,
businesses have the option of either hiring an outside firm to gather data or
performing their own research. Fortunately, a great deal of competitor research
can be accessed easily if you know where to look. If you decide to do it
yourself, start by compiling a list of your competitors. Next, determine the
questions you want to answer during your analysis. Some of the most common
questions to ask may include:

What products and services do my competitors offer?

Do my competitors target the same markets and audiences
that I do?
Are my competitors making money?
How fast are my competitors growing?
Additionally, businesses should assess where their competitors rank on factors
like customer service, quality of goods and prices. The goal is to eventually
determine how you can distinguish your business from competitors while
achieving the desired profits.

2. Examining Your Competitors

Once youve determined the goals of your analysis, its time to collect actual
data. While you can gather a great deal of valuable information from secondary
sources like journal articles and marketing reports, dont overlook less obvious
references, such as competitor advertisements and product brochures. These
documents can offer useful insight into competitors pricing along with their
advertising budgets and most marketable product features.

Additionally, take time to review your competitors financial data. Feel free to
visit competitors with brick-and-mortar locations. While you should refrain
from using dishonest tactics to gather info, asking other business owners
questions as though you were a client is a widely accepted practice for
conducting an industry analysis. You can also observe product placement within
the store, and even purchase a few items to see how they stack up against your
own.

3. Analyzing Competitive Data

After collecting competitor data from various sources, you can begin analyzing
it to form conclusions. The goal is to determine your competitors strengths and
weaknesses while evaluating how your own business stacks up.

A key part of the analysis step involves assessing a product or service itself.
Begin by listing out the top features of your various products or services. Next,
note whether or not your competitors offer those features. Pay close attention to
the products or services that your target audience sees as most important.
Additionally, you should note how well those features work and whether
customers feel that these benefits meet their current needs.

Are there things that your offering does better than the competition, or vice
versa? Answering that question could help you offer a better product or
service. Stay abreast of your customers good and bad points and look for places
where your business can shine.

4. Evaluating Your Position

Evaluating competitors strengths and weaknesses also enables you to identify
your own place in the market. Along with pinpointing advantages your company
has over the competition, you can identify future problems before they mature
into crises and adjust strategies accordingly.

For example, you may need to revise prices, add features or explore different
markets for your goods to stay ahead. The goal is to align your industry analysis
with a demographic study of your target customers so you can make the most
educated decisions moving forward.

You cant plan for your companys future effectively until you first determine
the place you occupy relative to your competition. A thorough industry analysis
is crucial to achieving success in the business world. By assessing your
competitors, you can identify market niches and figure out just what it is that
your target customers desire.