INDUSTRY

ANALYSIS

"Industrial revolution" by blvesboy is licensed under CC BY-ND 2.0

 Industry
• A group of companies that are
related based on their primary
business activities

• Similar business grouped based

on the primary product
produced or sold
"car-company-logos-main-image" by sidduz11 is licensed under CC BY 2.0
 Demand-supply
What is Industry statistics
Analysis?
a market assessment Degree of competition
tool used by
in the industry
businesses and
analysts to
understand the Technological changes
competitive
dynamics of an
industry Influence of external
factors in the industry
Industry Analysis for
Entrepreneurs

• To explain the general state of

your industry, its growth
potential, and how your
business model fits into the
landscape
 PESTLE
Analysis
• Gives a bird’s eye
view of the whole
macro environment
before deciding on a
certain plan or
business idea
https://cdn.shortpixel.ai/spai/w_1234+q_lossy+ret_img+to_webp/https://pestlea
nalysis.com/wp-content/uploads/2020/09/what-is-pestle-analysis-template.jpg
 Porter’s Five Forces
Michael Eugene Porter
• An economist, researcher, author,
speaker, and teacher

• Known for his theories on

economics, business strategy, and
social causes

"Michael Porter" by Nestlé is licensed under CC BY-NC-ND 2.0

Porter’s Five Forces

• Methodology for assessing industry attractiveness

• It views each force as a determinant of the level of

competition in the industry

• These five forces influence prices, costs, and required

investment of firms in an industry
Porter’s
Five
Forces

"File:Elements of Industry Structure.svg" by Denis Fadeev is licensed under CC BY-SA 3.0

 Bargaining Power
of Buyers
• High buyer’s power means customers
have more options to choose from
• Higher switching cost leads to lower
buyer’s power
• Buyer’s power can influence cost and
investment as powerful buyers
demand costly service
"Fruit Buyer" by johnno_oz is licensed under CC BY-NC-SA 2.0
 Bargaining Power
of Suppliers
• Determines the costs of raw
materials and other inputs
• High supplier’s power suggests
market players are highly
dependent on suppliers
• Determined by differentiation of
inputs, supplier concentration,
presence of substitute inputs, etc.
"Facilitating and encouraging innovation with our suppliers, UK" by Tesco PLC is licensed
under CC BY-NC-SA 2.0
New Entrants
• Determined by entry and exit barriers
• Threat is high when new company can easily enter the
industry

"Bokeh’d Barrier Warheads" by Ian Sane is licensed under CC BY 2.0

 Entry and Exit Barriers

Entry Barrier – strict Exit Barrier – high

legal regulations,
amount of working
presence of well-
capital trapped in the
established brands,
business
high capital investment
 Substitute
• Threat can come from any alternate
product or service which can offer
the same core value
• For example, public transport
services is a threat to car
manufacturing industry
• Coffee and tea are also substitutes

"Coffee or Tea" by Michael Kwan (Freelancer) is licensed under CC

BY-NC-ND 2.0
Rivalry among
Firms
• Determined by how
fiercely the firms compete
for market share
• High rivalry among firms is
characterized by
aggressive marketing
communication

"Breeding season rivalry - Agile Wallabies, Fogg Dam, Middle Point, NT, Australia" by Geoff
Whalan is licensed under CC BY-NC-ND 2.0
References

• Bureau of Small and Medium Enterprise (BSMED) 2015. Do you want to go

into business? Department of Trade and Industry Philippines

• https://articles.bplans.com/know-your-industry-before-you-start-your-
business/

• https://penmypaper.com/blog/how-to-conduct-an-industry-analysis/

• Porter, M.E. 1985. Competitive Advantage: Creating and Sustaining

Superior Performance. Published by The Free Press. ISBN 0-684-84146-0.