Bangladesh Institute of Capital Market

Investors’ Education Program

Industry Analysis for Capital Market Investment Decision

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Md. Adnan Ahmed
[MBA and BBA from University of Dhaka]
Lecturer
Bangladesh Institute of Capital Market
Contact: +880167-5186443
Mail: adnan@bicm.ac.bd

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Why Industry Analysis is Important ?

❑The business cycle and industry sectors

❑Structural economic changes and alternative industries

❑Evaluating an industry’s life cycle

❑Analysis of the competitive environment in an industry

What shapes an industry/sector ?

❑Product Types

❑Demographics

❑Lifestyle

❑Scale of operation
Industry Analysis Tools

1. Market Share Analysis

2. Herfindahl-Hirschman Index (HHI)

3. Porter’s Five Forces Model

4. PEST Analysis

5. Life Cycle Analysis

Why do we do Industry Analysis ?

Economy Analysis
Macroeconomic Analysis, Sector Evaluation, Country
Growth

Industry Analysis
Industry Growth, Industry Performance,
Future Potential

Company
Analysis

Finding the Intrinsic Value

 Sector-Wise Companies
Travel & Leisure 4
Textile 58
Telecommunication 3
Tannery Industries 6
Services & Real Estate 4
Pharmaceuticals & Chemicals 33
Paper & Printing 6
Mutual Funds 37
Miscellanous 14
Jute 3
IT Sector 11
Insurance 57
G-Sec (T Bond) 240
Fuel & Power 23
Food & Allied 21
Financial Institutions 23
Engineering 42
Debenture 8
Corporate Bond 11
Ceramics 5
Cement 7
Bank 35
0 50 100 150 200 250 300
How to Analyze Sector

1) Market Share Analysis

2) Herfindahl-Hirschman Index (HHI)

3) Porter’s Five Forces

4) PESTLE Analysis

5) Industry Cycle Analysis

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1. Market Share Analysis

Market share is the percent of total sales in

an industry generated by a particular company

Gives a general idea of the size of a company

in relation to its market and its competitors.

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Market Share Analysis

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Calculation of Market Share Analysis

Total Market Size: Assume the total market size for Market Share (%)
smartphones in a particular region is 10 million units.
Company A: 30 30
•Company A sold 3 million smartphones in the last year.
•Market Share for Company A = (3,000,000 / 10,000,000) * 100 = 30%
Company B:
•Company B sold 4 million smartphones in the last year.
•Market Share for Company B = (4,000,000 / 10,000,000) * 100 = 40%
Company C:
•Company C sold 2 million smartphones in the last year. 40
A B C
•Market Share for Company C = (3,000,000 / 10,000,000) * 100 = 30%
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2. Herfindahl-Hirschman Index (HHI)

A common measure of market concentration and is used to determine market competitiveness

The index measures the size of companies relative to the size of the industry they are in and
the amount of competitiveness

Measures the degree of concentration within a specific market

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Calculation of Herfindahl-Hirschman Index (HHI)
It can range from close to 0 to 10,000, with lower values indicating a less concentrated market.

Competitive: <1,500

Moderately Concentrated: 1500 – 2500

Highly Concentrated: >2500

​where:
sn​=the market share percentage of firm n expressed as a whole number, not a decimal​
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3. Porter’s Five Forces

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4. PESTLE Analysis

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5. Industry Cycle Analysis

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Thank You !