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Lecture 6 Industry Analysis - MBA

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Lecture 6 Industry Analysis - MBA

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Applied Research Methods

Lecture # 5
Industry Analysis
What is Industry Analysis?

• Industry analysis is an
assessment tool used by
business consultants and
analysts to understand a
particular industry’s
competitive dynamics.

• It is used to show how a


company compares to others
in its industry or niche.
Purpose of Industry Analysis
• Conducting an industry analysis is important for companies to learn
how market conditions affect their business.
• It helps us get a sense of what is happening in an industry, e.g., degree of
competition within the industry, state of competition of the industry with
other emerging industries, future prospects of the industry taking into
account technological changes, government policies, changing trends,
etc., and the influence of external factors on the industry.
• It is a method that helps to understand a company’s position relative to
other participants in the industry.
• It helps us to identify both the opportunities and threats coming their
way and gives them a strong idea of the present and future scenario of
the industry.
What Should Industry Analysis Include?

• It consists of three major elements:

• Broad Factors Analysis / Market Environment Analysis (PEST Analysis)


• Competitive Forces Model (Porter’s 5 Forces)
• SWOT Analysis
Broad Factors Analysis
• Political: The political aspect of PEST analysis focuses on the areas in
which government policy and/or changes in legislation affect the
economy, the specific industry, and the organization in question. Areas
of policy that may particularly affect an organization include tax and
employment laws. The general political climate of a nation or region, as
well as international relations, can also greatly influence the
organization.

• Economic: The economic portion of the analysis targets the key factors
of interest and exchange rates, economic growth, supply and demand,
inflation, and recession.

• Social: The social factors that may be included in a PEST analysis are
demographics and age distribution, cultural attitudes, and workplace
and lifestyle trends.

• Technological: The technological component considers the specific role


and development of technologies within the sector and organization, as
Some useful links on PEST Analysis

• https://essaypro.com/blog/guide-on-how-to-write-pestle-analysis
• https://www.indeed.com/career-advice/career-development/pest-analysis
• https://www.mdpi.com/2227-7072/5/2/14
• https://freepestelanalysis.com/pestel-analysis-of-entertainment-industry/
• https://panmore.com/netflix-pestel-pestle-analysis-recommendations-case-study
• https://onstrategyhq.com/resources/pestle-analysis-examples/
Competitive Forces Model (Porter’s 5 Forces)
Porter’s Five Forces Model
• The five competitive forces model is a framework for
understanding the structure of an industry.
• The model is composed of the forces that determine industry
profitability and industry attractiveness.
• Each of the five forces impacts the average rate of return for the
firms in an industry by applying pressure on industry profitability.
• Well-managed firms try to position their firms in a way that
avoids or diminishes these forces—in an attempt to beat the
average rate of return of the industry.
Some Useful Links on Porter’s 5 Forces

• https://www.investopedia.com/terms/p/porter.asp
• https://www.business-to-you.com/porters-five-forces/
Assessing Industry Attractiveness Using the Five Forces Model
SWOT Analysis
Competitor Analysis

• Competitive Analysis Grid


– A tool for organizing the information a firm collects about its
competitors
– A competitive analysis grid can help a firm see how it stakes
up against its competitors, provide ideas for markets to
pursue, and identify its primary sources of competitive
advantage.
Competitive a Analysis Grid for Expresso Fitness

5-16
How To Do An Industry Analysis?
• Industry analysis is a long and time-consuming process.
• Focus on the relevant industry.
• Conduct competitor analysis using Porter's five forces templates and
SWOT templates.
• Be completely aware of the new developments taking place in the
market. Be up to date.
What To Write In Industry Analysis?
• Begin with an overview of your industry.
• Support your industry data with charts and graphs and also mention its
growth potential in the coming future.
• Showcase your competitive strategy, SWOT analysis, etc.
• Perform analysis.
• Highlight factors like geographical growth, consumer base, price
fluctuations, past performances, and income projections.
What To Write In Industry Analysis?

• Forecast your industry’s growth for the coming years, based on your
present financial data.
• Represent your industry data with the help of your Porter five forces
model explaining in detail.
• Showcase long-term and short-term valuations that are impacting the
industry.
What To Write In Industry Analysis?

• Forecast your industry’s growth for the coming years, based on your
present financial data.
• Represent your industry data with the help of your Porter five forces
model explaining in detail.
• Showcase long-term and short-term valuations that are impacting the
industry.
Thank you
Q&A

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