There are seven structured questions in carrying out an industry analysis and practitioners have come to the conclusion that strategically,
industry analysis entails using some well-defined concepts and analytical tools to get clear answers to these seven questions:
a. What are the dominant economic features of the industry in which the company operates? – An industry’s dominant economic features are defined
by such factors as: Overall size and market growth rate, number and sizes of buyers and sellers, Geographic boundaries of the market, the degree
to which sellers’ products are differentiated and the pace of product innovation
b. What kinds of competitive forces (must use Porter’s five forces) are industry members facing and how strong is each force? – Competitive
pressures associated with the market maneuvering and jockeying for buyer patronage that goes on among rival sellers in the industry. Competitive
pressures associated with the threat of new entrants into the market. Competitive pressures coming from the attempts of companies in other
industries to win buyers over to their own substitute products. Competitive pressures stemming from supplier bargaining power and supplier-
seller collaboration and competitive pressures stemming from buyer bargaining power and seller-buyer collaboration
c. What forces are driving changes (discuss 4-6 key driving forces of change) in the industry and what impact will these changes have on
competitive intensity and industry profitability? – Driving-forces analysis has three steps: Identifying what the driving forces are. Assessing
the impact they will have on the industry and determining what strategy changes are needed to prepare for the impacts of the driving forces
d. What market positions do industry rivals occupy (requires the use of strategic group mapping)— to illustrate who is strongly positioned and
who is not? – Understanding which companies are strongly positioned and which are weakly positioned is an integral part of analyzing an
industry’s competitive structure. The best technique for revealing the market position of industry competitors is strategic group mapping. This
analytical tool is useful for comparing the market positions of each firm separately or for grouping them into like positions when an industry
has so many competitors that it is not practical to examine each one in depth.
e. What Strategic Moves Are Rivals Likely to Make Next? -Unless a company pays attention to what competitors are doing and knows their strengths
and weaknesses, it ends up flying blind into competitive battle. Competitive intelligence about rivals’ strategies, their latest actions and
announcements, their resource strengths and weaknesses, the efforts being made to improve their situation, and the thinking and leadership
styles of their executives is valuable for predicting or anticipating the strategic moves competitors are likely to make next in the
marketplace.
f. What are the Key Factors (5-6 key factors of success must be discussed) for Future Competitive Success? -An industry’s key success factors
(KSF) are those competitive factors that most affect industry members’ ability to prosper in the marketplace. Key success factors are the
product attributes; organizational competencies, competitive capabilities, and market achievements with the greatest impact on future
competitive success in the marketplace. How well a company’s product offering, resources, and capabilities measure up against the competition
and the industry’s KSFs has a direct bearing on company profitability and determines just how financially and competitively successful that
company will be.
g. Does the Outlook for the Industry Present the Company with an Attractive Opportunity? -The final step in evaluating the external environment
is to use the preceding analysis to decide whether the outlook for the industry presents the company with sufficiently attractive prospects for
profitability and growth.
In conclusion, all 7 Questions are equally important to the strategic planning process in allowing a company to determine whether it is
strongly or weakly positioned in its industry. The seven questions also provide information that is essential for the organization to build from
the outside in because no organization can survive today by building from the inside out. Organizations must ensure an operational fit between
what they do well and what its external market place wants. A company that is unable to respond quickly and strategically to the major driving
force of change in its industry would become obsolete. For example, Dell Inc failed to adapt to the disruptive innovation/ revolution of
smartphones, social networking and mobile applications technology; and today finds itself as a private company, although its recent acquisition
of EMC for $67 billion may be successful in the near future. The deal completes Dell’s transformation from a consumer PC business to an IT
solutions provider for companies.
Assignment 1:(1 page discussion)
Some venture capitalists believe that the chosen industry drives a firm’s profitability; others believe that an effective management team can
drive profits in any industry.
Develop an argument to support either side. Be as detailed as possible.
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Assignment 2(300 words minimum):
PESTEL Analysis
Complete the PESTEL framework worksheet.
Use library resources to identify either the Concentration Ratio 4 (CR4) or the HHI number for your industry.
Fill in the answers in the PESTEL Framework word document attached, and please answer using full technical details.
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Here is some required reading for the assignment below:
Industry Analysis
When entering any industry, it is critical to evaluate the political, technological, economic, environmental, sociocultural, and legal
environment of the industry to determine the attractiveness of the market. In this lecture, we will develop tools to identify the feasibility,
structure, and framework of the specific industry.
Reading
Chapter 5 – Industry Analysis, in Preparing Effective Business Plans, by Barringer – conduct industry analysis to evaluate the type of industry
for better awareness of the business plan.
Read the following article (use EBSCO database to locate article): Markets vs. Management: What ‘Drives’ Profitability? Strategic Management
Journal, Volume 17, Issue 8, pages 653–664, October 1996
Assignment 3:(4 pages)
Industry Analysis:
Conduct an industry analysis, in full details. Conduct extensive research and type out a well writes, well sourced, well cited, industry
analysis for your product.
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