Industry Analysis

Model Used: Porter 5 Forces Model

Name of the Industry Analysed: XYZ Industry
Name of the Rater: Mr X

Data Collection Questionnaire

The Five Forces (Construct) S.No

1
2
3
Threat of New Entrants 4
5
6
7
1
Threat of existing competitors 2
3
Threat of substitutes 1
1
2
Threat of supplier firms 3
4
5
1
2
Threat of customers
3
4
 Industry Analysis
Model Used: Porter 5 Forces Model
XYZ Industry

Developer: Dr Letenah Ejigu W

Date: May, 2
Data Collection Questionnaire

Items with in the Five Forces (Variables)

Existing firms don't have Economies of Scale (EOS) advanatge
There is no product differntation in the industry
Existing firms don't use use propriteray technonolgy
Existing firms have no quality management team
Existing firms no have favorable access to raw materials
There is no learning curve economies in the industry
The is few government restrictions to enter into the industry
Does the industry has large number of firms?
Are firms in the industry of equal size?
Is the industry growth sluggish?
Does the products produced by firms have close substitutes?
Does the supplier industry has small number of firms?
Does the supplier firms produce differntatied products?
Are the supplier firms not challenged by close substitues?
Does suppliers threaten forward vertical integration?
Are firms not an importnant customer of suppliers?
Are the number of customers small?
Are the products sold to customers a signficant portion of customers total costs?
Does customer earn little economic profit?
Does customers threaten backward vertical integration?

Data Analysis

Count of responses
Percentage of responses
Decision
per: Dr Letenah Ejigu Wale
Date: May, 2020.

Rating Remark
No = 1 Yes = 2

2 EOS means unit cost reduction by producing and selling large number of units. In
1 When we say products are different it may be because they are really different or
1 Propritery technology means a technology a single firm own and no other firm po
1 Management team include the board of directors and executive management upto
1 Favorable access to raw materials can be in terms of unquie access to raw materia
2 Learning curve economies means cost reduction as a a result of learning by doing
2 Sometimes a government can restrict entry to a specific industry by capital requir
1 To answer this, you have to count how many firms exist in the industry.
1 Firm size can be measured in terms of assets, sales, number of employees, capital
2 Growth can be measured by sales growth, asset growth, net income growth
2 Substitute products are those that satisfay customers needs in a different way than
2 First identify who your suppliers are. Normally suppliers are those that provide y
1
1 Here when we say substitutes, we mean substitutes to the products supplied by th
1 Supplier firms will threaten forward vertical integration if the barriers to entry to
1 Firms are not importnant customer for a supplier if the supplier drive the major pa
2 To answer this question, you have to know your customer, their size and charcate
2 If the product sold is a signficant part of a customer total cost, customers may thr
1 If the customer in question is an industrial firm and they earn little profit, they ma
1 Customers can threaten backward vertical integration if entry barriers to the firm

No Yes Total
12 8 20 We give equal weight to each of the 5 forces and hence we only count t
60% 40% 100%
Attractive Industry If the number of No responses is greater than the number of Yes respon
 number of units. Industries that get EOS advanatge are those that employ large fixed costs such as building, m
e really different or they may positioned by the company to be different when in fact they are the same. Examp
and no other firm posses
e management upto lower management
ccess to raw materials for a specific firm or price concessions
of learning by doing or increase in cummulative production
try by capital requirment, excessive regulation or outright ban for government to be a monopoly. Example for
e industry.
employees, capital etc
come growth
a different way than the product in question. Example tea and coffee are substitutes.
hose that provide you raw material, labour, and overhead. Overhead include fixed assets such as building, mac

ducts supplied by the supplier firm, not by our firm in question.

barriers to entry to the firms industry is weak. Example the telecom industry can enter into banking if the bank
er drive the major part of its sales from other customers
ir size and charcaterstics. This is simply demand analysis. Customers can be final consumers or industrial cust
customers may threaten price concession. Example look our household budget or look the basket of goods tha
little profit, they may threaten for price concessions from the firm.
barriers to the firm industry are low. Example banks are the customer of the telecom industry. But if the teleco

nce we only count the number of responses. We don't compute weighted average or any other measure of sum

mber of Yes responses, the industry can be judged as attractive. But such analysis is a standalone one. A bette
xed costs such as building, machinery etc. The fact that the firm use large fixed costs doesn't gurantee the pres
act they are the same. Example apple iPhone is really different from samsung or other smart phone in terms of

be a monopoly. Example for long time the Ethiopian government is a monopoly in electricity, telecom, air tran

assets such as building, machine, infrastructure etc

enter into banking if the banking sector has low barrier to entry. This is an example of forward vertical integra

consumers or industrial customers. If your firm produce a final product, the customer is the final consumer. If
look the basket of goods that constitute the Consumer Price Index (CPI). Much of our spending is for food, re

om industry. But if the telecom service is weak or they are threatened by high price, they may decide to enter i

or any other measure of summary statistics

is a standalone one. A better way of appriasing an industry attractivness is comparing the number of No and Y
osts doesn't gurantee the presence of EOS. There should be ample market demand to absorb the massive produ
ther smart phone in terms of its design, hacking risk, software needs etc. Besides apple can look different than

electricity, telecom, air transport etc.

e of forward vertical integration

mer is the final consumer. If your firm produce an intermediate product, the customer can be an industrial firm
f our spending is for food, rent and transport etc. These industries can be labelled as necessities. So firms in th

e, they may decide to enter into the telecom industry and become direct competitiors rather than customers. T

aring the number of No and Yes responses of a specific industry with another industry.
 to absorb the massive product or serivce produced.
apple can look different than other smart phones by heavy promotion or positioning to be a phone for the uppe

omer can be an industrial firm that use the intermediate good for further processing to produce a final product.
as necessities. So firms in these industries have a great challenge from customers for price concessions. The g

ors rather than customers. Their decision depends on the extent of barriers to entry to the telecom industry.
ng to be a phone for the upper income segement of the soceity.

g to produce a final product. So knowing your customer sharply is crticial in market analysis. Customers can a
for price concessions. The government may also set a tariff on the prices of products sold by these firms.

ry to the telecom industry.

et analysis. Customers can also be classifed as unserved and underserved. Unserved means those customers w
cts sold by these firms.
ed means those customers who have no access to the products or serivces of the industry. Underserved means
dustry. Underserved means those customers that have access to the products or serivces of the industry but the
rivces of the industry but their needs are not sufficiently met. Example in banking sector, we found both unser
sector, we found both unserved and underserved segements. In Ethiopia most households have no access to c
useholds have no access to credit. So they are unserved. Those who already have access to credit also are not h
access to credit also are not happy with the long bureacracy, the small loan size, the undervaluation of their co
he undervaluation of their collateral, the high interest rate, the corruption in lending etc. If you find many unse
g etc. If you find many unserved customers, that is the nice part. You have ample market. But getting unserved
market. But getting unserved requires snatching customers from existing competititors which is a difficult task
titors which is a difficult task.