Industry Analysis

• After economic analysis, we

ask the question “which
industries will benefit most
from the upcoming economic
environment?”
• This will lead to several
industries, and our analysis
will lead us to choose the one
that we find to be best
positioned.
What is an Industry?
 INDUSTRY GROUPS
• AGRICULTURE • TELECOM
• STEEL • UTILITIES
• HEALTH CARE • PAPER &
• RETAIL PRINTING
• AUTOMOBILES • BANKING
• PHARMACEUTICAL • FMCG
• FINANCIAL • INFRASTRUCTURE
SERVICES • TEXTILE
• HOTEL & TOURISM • OILAND GAS
• IT EXPLORATI
ON
 SIC
Code
• ECONOMIC SECTOR
– Manufacturing
– Distribution
– Services
• PRODUCT AND SERVICES
– List of what is offered by the industry
• GEOGRAPHIC SCOPE
– Local ,Regional, National,
International
 Computer industry
• Different Market
Segments
– Personal
Computer
– MicroComputer
– Mini Computer
– Mainframe
Computer
 Furniture
industry

Home Office
Furniture Furniture

Wooden Metal
Hosehol Househol
d d
 Industry Life Cycle

Growing Established

Emerging
Decline

New Technology
Industry Structure
• Threat of new entrants
• Economies of scale
• Brand loyalty

• Threat from substitute products

• Threat from buyers’ bargaining power
• Threat from suppliers’ bargaining power
• Rivalry among existing firms
• Threat of technology
What Do You Want to Know?

• Is the industry
growing?
• What are the trends?

• Are there young,

successful firms in
the industry?
Industry Analysis–The Environment
• Carrying capacity

• Dynamism

• Complexity
Sources of Field Data
on the Industry
Understand Competitive Strategies in the Industry
• Cost superiority

• Differentiation
• Product
• Service
• Distribution

• Niche
Identifying the Competition
• Direct competitors

• Indirect or substitute competitors

• Emerging competitors
Competitor Analysis
• Identify competitors’ core competency
• Differentiates
• Provides competitive advantage
• Transferable to other business

• Is often not the logical competency

Value Chain Analysis
• Each activity in a business adds value
• If an activity does not add value, it should
be discontinued

• Control and protect the activities that add the greatest

value
• Good for comparing two companies
Patent Citation Analysis
• You can develop useful intelligence from looking at your
competitor’s patents
• A stream of patents assigned to a company can reveal a
strategy
Competitive Entry Strategies
• Cost Superiority
• Difficult for a new venture

• Differentiation
• Through product/process innovation or a unique marketing or
distribution strategy
• Niche Strategy
• Focus on a customer group or need that is not being served
 Reasons of industrial analysis

• Provide an awareness
of market performance

• Identify
investment
opportunities

• Important part of
company’s business
plan
– Financial institutions
 Data Requirement
 Product Line  Buyer and
 Complementry their
Product Behaviour
 Product Growth  Substitute
 Product Pattern Product
(Seasonal,Cyclical)  Prices
 Econimies of Scales  Marketing and
 Suppliers Selling
 Labour Market  Cost Structure
 Logistic
 TOOLS FOR INDUSTRY ANALYSIS

Qualitative Quantitative
• Cross sectional • Analysing employment
industry performance data
• Industry • Analysis of emolument
performnce data
• Earning data
overtime Input output analysis
•analysis
• Difference in
industry risk
• SWOT analysis
• Competition over
industry life cycle
Cross sectional industry
performance
• Aimed at finding out variability in Rate of
return among various industries in given time
period
• compare
performance in term
of
– Sale
– profit
– market capitalisation
– dividend
 Industry performance over time
• To identify stage of product life cycle
• Time duration 3 to 5 year
• Difficult to forecast future performance due
to
 compositional
change in industry
 technological change
 innovation
 Differences in industry risk
• Besides focussing on return also consider
risk
• Specifically investigate two question
– Does risk differ across industries in given time period
– Are industry risk stable over time
• Measured in term of variability
in return/productive value
• Risk pattern also depend on
economic situation
 SWOT ANALYSIS
Strenth & weakness Opportunity &
threat
• Assess strenth • Evaluate opportunity
and weakness and threat
• Internal capability • Environmental trend
of industry • External situation
• Competitive advantage or – Competitive forces
defensive against – Technology
weakness – Government regulation
 SWOT analysis
STRENTH
•WEAKNESS
• Capicity
• Competitive advantage • Limitation default defect
• Good custermor • Competitor has
service exploitable advantage
• High quality product • Example:
• Customer loyality – Small scale industry hs poor
• Financial resources financial resources
– Industry that cater domestic
market, would have weakness
of catering to global market
 SWOT analysis

•Opportunity Threa
t• Unfavourable situation
• Favourable condition
• May be barrior or
in environment
constraint
• May be trend or • Slowing domestic economy
need • Competition
• Growing market of • New entrant
industry product • New technology
• Shrinking competition
• Identification of
new market
 SWOT analysis

Threat Confront Avoid

External
environmen
t
Exploit Search
Opprtu
nity

Strent Weaknes
h s

Internal environment
 Analysing Employment data
• Life cycle can be predicted by Product
life cycle
• Help in identify key industries
• Identify growth and decline
• Evaluate importance of industry to
economy
• DetermineCompetitiveness among
industries
 Data
Requrement
• Industry wise total employment in current as well earlier years
• Industry wise total emolument data in current as well earlier
years

Employes:
Who
receive
wge
and
hold
clerical
superw
isery
post

Duration of
analysis
 Input output analysis
• Total input
Include value of fuel,material
consumed,expenditure,repair
costtaxes,,postage,banking
charges

• Total output
value of
product
byproduct