Monday, November 7, 2011

More about Industry analysis

Industry analysis is relevant both to corporate-level and business-level strategy.

* Corporate strategy is concerned with deciding which industries the firm should be engaged in and how it should allocate its resources among them. Such decisions require assessment of the attractiveness of different industries in terms of their profit potential. To understand how the competitive structure of an industry determines its profitability.

* Business strategy is concerned with establishing competitive advantage. By analyzing customer needs and preferences and the ways in which firms compete to serve customers we identify the general sources of competitive advantage in an industry – what we call key success factors.
As an Analyst, one should be able to: 
  1. Identify the main structural features of an industry that influence competition and profitability.
  2. Use industry analysis to explain why in some industries competition is more intense and profitability lower than in other industries.
  3. Use evidence on structural trends within industries to forecast changes in competition and profitability in the future.
  4. Develop strategies to influence industry structure in order to improve industry profitability.
  5. Analyze competition and customer requirements in order to identify opportunities for competitive advantage within an industry (key success factors).

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