Chapter 3 - Industry analysis: The fundamentals. This chapter presents the following content: The objectives of industry analysis, from environmental analysis to industry analysis, porter’s five forces framework, applying industry analysis, industry & market boundaries, identifying key success factors. | Industry Analysis: The Fundamentals The objectives of industry analysis From environmental analysis to industry analysis Porter’s Five Forces Framework Applying industry analysis Industry & market boundaries Identifying Key Success Factors OUTLINE 1 17 The Objectives of Industry Analysis To understand how industry structure drives competition, which determines the level of industry profitability. To assess industry attractiveness To use evidence on changes in industry structure to forecast future profitability To formulate strategies to change industry structure to improve industry profitability To identify Key Success Factors 2 18 THE INDUSTRY ENVIRONMENT Suppliers Competitors Customers Social structure The national/ international economy Technology Government & Politics The natural environment Demographic structure Social structure From Environmental Analysis to Industry Analysis The Industry Environment lies at the core of the Macro Environment. The Macro Environment impacts the firm through its effect on the Industry Environment. 3 Profitability of US Industries Pharmaceuticals Gas & Electric Utilities Tobacco Food and Drug Stores Household & Personal Products Motor Vehicles & Parts Food Consumer Products Home Equipment Medical Products & Equipment Railroads Beverages Hotels, Casinos, Resorts Scientific & Photographic Equipt. Insurance: Life and Health Commercial Banks Building Materials, Glass Publishing, Printing Metals Petroleum Refining Semiconductors & Apparel 14. 3 Electronic Components Computer Software Insurance: Property & Casualty Electronics, Electrical Equipment Food Production Furniture Telecommunications Chemicals Forest and Paper Products Computers, Office Equipment Communications Equipment () Health Care Airlines () Median return on equity (%), 1999-2002 4 Long-term Profitability of US Industries: EVA | Industry Analysis: The Fundamentals The objectives of industry analysis From environmental analysis to industry analysis Porter’s Five Forces Framework Applying industry analysis Industry & market boundaries Identifying Key Success Factors OUTLINE 1 17 The Objectives of Industry Analysis To understand how industry structure drives competition, which determines the level of industry profitability. To assess industry attractiveness To use evidence on changes in industry structure to forecast future profitability To formulate strategies to change industry structure to improve industry profitability To identify Key Success Factors 2 18 THE INDUSTRY ENVIRONMENT Suppliers Competitors Customers Social structure The national/ international economy Technology Government & Politics The natural environment Demographic structure Social structure From Environmental Analysis to Industry Analysis The Industry Environment lies at the core of the Macro Environment. The Macro Environment impacts the .
