Industry Analysis Flashcards by C h a r l o t t e

This is beneficial in identifying opportunities and threats so that firms can have a strong idea of the present and future scenarios of the industry they belong to.

Industry analysis

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Entrepreneurs conduct __________________ to understand the business’ state and degree of competition and help them strategize better.

industry analysis

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Four (4) ways business opportunities can be identified

Listen to potential clients and past leads
Listen to your customers
Listen to your competitors
Look at industry trends and insights

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It can help the firm expand and identify business opportunities.

Listen to your customers

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This can be done by consolidating frequently asked questions, experiences, frustrations, feedback, and complaints.

Listen to your customers

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listen to the needs, wants, and challenges they experienced in your industry.

Listen to potential clients and past leads

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This can help the firm develop more tailored products and services, refine its target market, and overcome common objections and complaints about the products/services.

Listen to potential clients and past leads

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Competitor analysis can help identify key business opportunities to expand the firm’s market reach and develop products and services.

Listen to your competitors

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The entrepreneur must know what other firms are doing.

Listen to your competitors

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The entrepreneur must continue to educate himself about the latest trends and techniques by joining relevant associations, subscribing to different publications, and following industry experts’ social media accounts.

Look at industry trends and insights

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_________________ can help identify key business opportunities to expand the firm’s market reach and develop products and services.

Competitor analysis

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This refers to the area the firm caters to.

Geographic area

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The firm estimates how big the industry is and the trends which present special opportunities or challenges to the firm.

Industry size and outlook

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It also looks at the industry outlook for the next three (3) to five (5) years.

Industry size and outlook

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Industry size and outlook looks at the industry outlook for the next_______ to _______ years.

three (3) to five (5) years

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Below are the key factors in analyzing the industry

Geographic area
Industry size and outlook
Factors affecting the growth of the firm
Identification of leading businesses in the Industry

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The firm considers personal and behavioral attributes of the head of the firm, business structure, outside forces that the firm has no control of, location, financial stability of the firm, and new markets or products/services which can affect the growth of the firm.

Factors affecting the growth of the firm

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Having information on the most successful firms in their industry can inspire and motivate them to be like them.

Identification of leading businesses in the Industry

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Types of Industries

Primary industry
Secondary Industry
Tertiary Indistry

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This sector consists of agriculture, forestry, fishing, mining, quarrying, and the extraction of minerals.

Primary industry

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This consists of agriculture, forestry, livestock management, and fishing.

Genetic industry

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Primary industry two (2) categories

Genetic industry
Extractive industry

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The production of raw materials by firms can be improved and increased due to scientific and technological improvements to these renewable resources.

Genetic industry

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This consists of mining mineral ores, quarrying stones, and extracting mineral fuels.

Extractive industry

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Firms in this industry produce exhaustible raw materials that cannot be augmented through cultivation.

Extractive industry

It is also known as the manufacturing industry.

Secondary industry

This sector consists of the construction and energy-producing industries.

Secondary industry

It processes raw materials into consumer goods.

Secondary industry

This industry builds on capital goods in manufacturing products/goods.

Secondary industry

It can further process the transformed products of other secondary industries.

Secondary industry

It is also known as the service industry.

Tertiary industry

The firm’s revenues come from providing intangible products.

Tertiary industry

It directs how economic value is divided among industry actors.

Michael Porter’s Five-Forces Model of Competition

is a framework for understanding the competitive forces in an industry.

Michael Porter’s Five-Forces Model of Competition

An analysis of the five (5) forces helps firms evaluate the industry attractiveness, trends and how those affect the following:

Industry competition Whichever industries a firm must compete in Ways on how firms can position themselves for success.

A force can be considered a _________ force if strong and weak situations exist.

moderate force

The strength of each force could be ______, _________, or _______.

strong, moderate, or weak

Michael Porter’s five (5) forces

Rivalry among competing sellers Buyer bargaining power Supplier bargaining power The threat of potential new entrants The threat of substitute products or services

The competitive pressures are created by the jockeying of rival sellers for a better market position and competitive advantage.

Rivalry among competing sellers

The competitive pressures stem from the collaboration and bargaining of suppliers and sellers.

Supplier bargaining power

The competitive pressures stemming from the collaboration and bargaining of buyers and sellers.

Buyer bargaining power

The competitive pressures are coming from the threats of entry of new rivals.

The threat of potential new entrants

Identify if it's strong, weak, or moderate force There is a rise in the diversity of competitors concerning long-term directions, objective strategies, and countries of origin. There is a slowly growing buyer demand.

Strong Rivalry among competing sellers

The competitive pressures are coming from the market attempts of outsiders to win buyers over to their products.

The threat of substitute products or services

Identify if it's strong, weak, or moderate force There are high switching costs for buyers

Weak Rivalry among competing sellers

Identify if it's strong, weak, or moderate force There is a rapidly growing buyer demand

Weak Rivalry among competing sellers

Identify if it's strong, weak, or moderate force There is high customer loyalty, and the rival seller’s products are strongly differentiated.

Weak Rivalry among competing sellers

Identify if it's strong, weak, or moderate force As the buyer demand decreases, the sellers now have excess capacity or inventory.

Strong Rivalry among competing sellers

Identify if it's strong, weak, or moderate force There are low switching costs for buyers.

Strong Rivalry among competing sellers

Identify if it's strong, weak, or moderate force The rival sellers’ products are weakly differentiated or are considered commodities.

Strong Rivalry among competing sellers

Identify if it's strong, weak, or moderate force There is an increase in the number of rivals of roughly equal size and competitive capability.

Strong Rivalry among competing sellers

Identify if it's strong, weak, or moderate force There are high exit barriers, keeping unprofitable businesses from leaving the industry.

Strong Rivalry among competing sellers

Identify if it's strong, weak, or moderate force There is a low switching cost to competing brands or substitute products.

Strong Buyer bargaining power

Identify if it's strong, weak, or moderate force Large buyers demand concessions when buying large quantities.

Strong Buyer bargaining power

Identify if it's strong, weak, or moderate force There is weak buyer demand, or it is already declining.

Strong Buyer bargaining power

Identify if it's strong, weak, or moderate force It is important for sellers that buyers have large volume purchases.

Strong Buyer bargaining power

Identify if it's strong, weak, or moderate force Since there are only a few buyers, every transaction is important to sellers.

Strong Buyer bargaining power

Identify if it's strong, weak, or moderate force The sellers consider the buyer’s identity as adding prestige to their list of customers.

Strong Buyer bargaining power

Identify if it's strong, weak, or moderate force There is an improvement in the quantity and quality of available information to buyers.

Strong Buyer bargaining power

Identify if it's strong, weak, or moderate force There is the threat of backward integration for some buyers. The firms become sellers themselves. To do a backward integration, a firm purchases another firm, the supplier of the products or services needed for production.

Strong Buyer bargaining power

Identify if it's strong, weak, or moderate force If buyers dislike the seller’s prices, they can postpone their purchases.

Strong Buyer bargaining power

Identify if it's strong, weak, or moderate force There are high buyer switching costs to competing brands or substitute products.

Weak Buyer bargaining power

Identify if it's strong, weak, or moderate force There is an infrequent purchase of items by the buyers, or they are purchasing the item in small quantities.

Weak Buyer bargaining power

Identify if it's strong, weak, or moderate force There is an increase in buyer demand, creating a “sellers’ market.”

Weak Buyer bargaining power

Identify if it's strong, weak, or moderate force The brand reputation of the seller is significant to the buyer.

Weak Buyer bargaining power

Identify if it's strong, weak, or moderate force Other brands do not match the delivered product quality or performance of a seller’s product.

Weak Buyer bargaining power

Identify if it's strong, weak, or moderate force There are high switching costs for industry members to alternative suppliers.

Strong Supplier bargaining power

Identify if it's strong, weak, or moderate force A short supply of needed inputs gives suppliers more leverage in setting prices.

Strong Supplier bargaining power

Identify if it's strong, weak, or moderate force Having differentiated input, a supplier enhances the seller’s product’s image, quality, and performance. A supplier having differentiated input is a critical or valuable part of the production processes of the seller.

Strong Supplier bargaining power

Identify if it's strong, weak, or moderate force There are only a few suppliers for a certain output.

Strong Supplier bargaining power

Identify if it's strong, weak, or moderate force The supplied item is considered a commodity and is readily available from many suppliers at the current market price.

Weak Supplier bargaining power

Identify if it's strong, weak, or moderate force There are low switching costs for sellers to alternative suppliers.

Weak Supplier bargaining power

Identify if it's strong, weak, or moderate force There are new substitutes that emerge.

Weak Supplier bargaining power

Identify if it's strong, weak, or moderate force There is an increase in the availability of supplies. This greatly weakens supplier pricing power.

Weak Supplier bargaining power

Identify if it's strong, weak, or moderate force There is a chance for industry members to integrate backward (to be suppliers themselves) or self-manufacture what they need.

Weak Supplier bargaining power

Identify if it's strong, weak, or moderate force A big fraction of the suppliers’ total sales are from industry members. It is vital for the suppliers’ well-being that industry members continue having high-volume purchases.

Weak Supplier bargaining power

Identify if it's strong, weak, or moderate force There is a large entry pool of candidates. Some of the candidates have the resources that make them formidable market contenders.