Industry analysis
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Identifying existing business traditional approach Traditionally business strategy was defined as: ‘the long-term purpose and positioning of the organisation within its industry’ ….and would address the questions: Does the organisation plan to grow? What products and services does it plan to produce? What customer and geographic markets does it plan to service? What generic strategy does it plan to follow? What position does it plan to hold in the future?
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Transcript of Industry analysis
Identifying existing business traditional approach
Traditionally business strategy was defined as: ‘the long-term purpose and positioning of the organisation within its industry’
….and would address the questions: Does the organisation plan to grow? What products and services does it plan to produce? What customer and geographic markets does it plan
to service? What generic strategy does it plan to follow? What position does it plan to hold in the future?
External Analysis:1.Industry analysis The strategy analyst needs to understand
where the firm may be best positioned to maximise profit.
Industry analysis is the mapping of forces and powers within industries (Porter, 1980) The analyst is able to understand the effects of
market concentration, dependencies between the firm and customers and the effects of new entrants to the industry.
Industry analysis maps out the ‘battlefield’ in terms of power, positions and threats and assists the firm to find a profit-maximising position.
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Porter’s Five-Forces Model
Threat ofSubstitutes
Threat ofSubstitutes
Threat of New Entrants
Threat of New Entrants
Bargaining Powerof Customers
Bargaining Powerof Customers
Bargaining Powerof Suppliers
Bargaining Powerof Suppliers
Rivalry AmongExisting
Competitors
Modified Porter Analysis (Hubbard, 2004)
Historic Background of Industry and Trends. Recent history of industry. Important trends influencing future directions. Key questions
What drives demand? What drives choice? What drives price? What drives cost? What underpins the sustainable competitive
advantage? What are the current and potential risks?
External Analysis:2. Analysing your competitors
Competitor analysis should include both a detailed analysis of our own position, and also of each key competitor.
Information needed about each competitor business and corporate strategies key stakeholders, their commitment and values current position - market share and position,
financial performance satisfaction with current industry position
