J0704-Business Plan

Industry Analysis

Session 7

J0704-Business Plan

There is one rule for industrialist and that is: Make the best quality of goods possible at the lowest cost possible, paying the highest wages possible – Henry Ford

Provide the context for the business

J0704-Business Plan

The Elements of an Industry Analysis

•Industry Analysis Summary

•Industry Description

•Industry Size and Maturation

•Industry Trends and Impact Factors

•Industry Standard

•Industry Obstacles

•Industry Opportunity

J0704-Business Plan

Industry Analysis SummaryWrite this one after you have finished the section, so you

can emphasized the important result of each segment and present them in order– Cover the best or unique features of the industry description– State your business economic sector– Describe your sector’s growth level as slow, moderate or fast– Identify your industry and describe its size and rate of growth as

compared with the gross domestic product– Label your industry’s level of maturation as expanding or stable-

supported by the actual growth rate percentage– Include trends or factors that affect your industry– Explain industry opportunities you consider important to the

future of your business

J0704-Business Plan

Industry Description• Industry’s total sales (in currency) for most recent

years• Total number of companies in your industry• Dominant company profile in your industry• Company elements that best characterize all

companies in your industry : size, relative quality, relative pricing, specialization, methods of production, types of products or services, customer profile, market segments, method of sales, maturity, management and customer loyalty.

• Any notable changes occurring in your industry

J0704-Business Plan

Industry Size and Maturation

• Size of economic sector

• Growth rate of economic sector

• Size of Industry• Growth rate of

industry

J0704-Business Plan

Industry Trends and Impact Factors

• Nearly every industry has trends that cause sales to go up and down.

• To successfully deal with these, you need to identify them and recognize their impact on your industry and your business

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Industry Standard

Some of the more common industry standards are:

• Return and allowance of gross sales

• Credit terms

• Sales commission percentage

• Retail markup

• Distributor markup

J0704-Business Plan

Industry Obstacles

• Is your industry too well established for competition to break into easily ?

• The most common obstacles are :– High capitalization– Complex technological needs– Expensive promotion costs– Cyclical economic extremes– Domination by large stabilized companies– Market shift to one-stop shopping– Patent & copyright

J0704-Business Plan

Industry Opportunities

• Look at your industry for the possibility of eventually capturing market share or even dominating it by developing some of the strategies for your business:– Lowest price– Best customer service– Best at solution– Most innovative, etc