How to conduct an Industry Analysis: A template

The following steps should be used as a template to report major findings and organize your research. 

Several key factors must be considered as you analyze your industry: 
* Geographic Area – local?, regional?, statewide?, national?, international?
* Industry – size, trends, outlook
* Product
* Buyers – target customers
* Regulatory Environment
* Company Information – identify and research most successful businesses

Identify the industry

Determine the Standard Industrial Classification (SIC) Code and/or NAICS Code.

Industry Overview

Include:
* A brief history
* Factors that affect growth
* Government regulations
* Leading businesses in the industry
 

Library Resources: 
* Standard & Poor's Industry Surveys
* US Industry & Trade Outlook
* Encyclopedia of Emerging Industries, Gale Research
* Encyclopedia of American Industries, Gale Research
Internet Resources (free or for purchase):
* Trade Associations – Find appropriate associations in: Encyclopedia of Associations
or a general Internet search)
* Hoover's Online (www.hoovers.com) – Companies and Industries Section
* MarketReseach.com (www.marketresearch.com) – Retailer of private market
research reports

Include:
* Estimated size of the industry – Dollars? Products/Services sold?
* Establish trends in sales over recent years
* Determine current operational/management trends within the industry?
* What types of marketing strategies are prevalent within the industry?
* Is the industry seasonal?
* Is the industry sensitive to economic fluctuations?
 

Library Resources:
* Standard & Poor's Industry Surveys
* US Industry & Trade Outlook
* Encyclopedia of Emerging Industries, Gale Research
* Encyclopedia of American Industries, Gale Research
Internet Resources (free or for purchase):
* Trade Associations – There may be more than one per industry
Note: Ask specific questions, e.g., “How large is the textile market in
North Carolina in terms of dollars?” or “Do you have a list of food distributors
available for the Southeast?”
* ZapData – Dun & Bradstreet offers free statistical industry data on their website
www.zapdata.com. Free registration is required.
* BizStats – www.bizstats.com
* SBDCnet – www.sbdcnet.org
* Hoover's Online (www.hoovers.com/) – Companies and Industries Section
* MarketReseach.com (www.marketresearch.com) – Retailer of private market
research reports
 

Industry Developments, News, Innovations, and Government Regulations

Resources:
* Literature searches of newspapers, journals, and magazines – Local library publications and
online databases (NCLive, Dow Jones Interactive, InfoTrac).
* Trade associations and industry magazines – Connect through association websites
* Better Business Bureau (www.bbb.org)
* Library of Congress’s Legislative Information (http://thomas.loc.gov/)
* North Carolina General Assembly (www.ncleg.net)
Industry Developments, News, Innovations, and Government Regulations
How to Conduct an Industry Analysis
Small Business and Technology Development Center | www.sbtdc.org Page 3 of 4
 

Consumer Market Data 

Include:
* Demographics – Population/household size, median income, age, sex, race, ethnicity, family
status, housing status, etc.
* Psychographics – Lifestyle information, tastes, preferences, and buying habits
 
Library Resources:
* Lifestyle Market Analyst, SRDC – used for collecting psychographic data
* Demographics USA County or Zip Code editions, VNU Publishing
Internet Resources (free or for purchase):
* Bureau of the Census web site: www.census.gov
* ESRI – Has free demographic data available by zip code on their website,
http://www.esri.com/data/esri_data/demographic.html
* EASI (www.easidemographics.com) will give estimated demographic statistics
within a user-specified radii for any address
* For psychographic information and analysis of zip code areas, use Claritas’ website:
http://www.claritas.com/MyBestSegments/Default.jsp
 

Competitor information

Include:
* Who are the major businesses in the industry?
* Where are they located?
* How long have they been in business?
* What is their market share?
 

Library Resources:
* North Carolina Business Directory
* Encyclopedia of American Industries, Gale Research
* Harris InfoSource Business Directory
 
Internet Resources (free or for purchase):
* Trade Associations
* Securities Exchange Commission (for research on public companies) –
www.sec.gov/edgarhp.htm
* ReferenceUSA (subscription-based service for libraries and government agencies – See
their parent company site, InfoUSA at http://home.infousa.com/)
* NC Employment Security Commission’s WebSARAS site (www.websaras.org) –
Go to the ‘Employers’ link to find information on North Carolina Companies
* Dun & Bradstreet’s Zapdata (www.zapdata.com)
* Hoover’s Online (www.hoovers.com)
* Thomas Register (www.thomasnet.com), Thomas Regional
(thomasregional.com), or Thomas Global Register (www.tgrnet.com)
– Free registration is first required
* Search company websites for more information on their business.
 

Leads and Other Information on the Internet

Perform a search in a search engine such as Google (www.google.com), Search.com
(www.search.com), or Dogpile (www.dogpile.com). Use common industry jargon and/or
search to see if the identified trade associations have web sites. Use quotes around a multi-word phrase when searching, to ensure that it will be treated as one phrase instead of two/several words. Many times the most commonly asked questions about an industry will be published online.

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).

How to do an industry analysis.

Steps :

1. Read the available industry reports and statistics, see whether it makes sense to dig deeper.
2. There are sub-parts in industries. For example, if you look at chemical industry, you will find sub-industries like Fertilizers, Pesticides, Paints and Varnishes, Organic chemicals. It is important to focus on the relevant industry. Also look at the different market segments in a particular industry.
3. Look at the demand-supply scenario for a particular product/ industry by studying the past trends and forecasting future outlook.
4. Study the competitive scenario: Use the framework of industry analysis - Porter’s five forces model.  In this model, five parameters are analyzed to see the competitive landscape. This model is used extensively while analyzing any industry. They are (a) Barriers to entry, (b) Supplier Power, (c)Threat of substitutes, (d) Buyer power, and (e) Degree of rivalry
5. Study and include recent developments, innovation in your industry analysis report.
6. Look at sector valuations and global comparative valuations.
7. The analysis should be specific to a particular industry and so it is important to focus and understand the industry dynamics.
8. Your industry analysis should be in-depth and to-the-point. For example, if you are tracking aluminum industry, you should know per capita consumption in the country. In India, per capita consumption of aluminum is 1 kg, in US it is 25 to 30 kgs, in Japan it is 15 kgs, in Taiwan it is 10 kgs. Apart from the consumption, you should also know the production of aluminum worldwide.

Why BRICS & N-11?

N-11 or the NEXT ELEVEN countries - Goldman Sachs Report

BRICS countries : Goldman Sachs Report

The whole world is going gaga over New Growth & Emerging markets. About BRICS (Brazil, Russia, India, China & South Africa) & N-11 countries (Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, South Korea, Turkey & Vietnam) . 

There is a reason for that. In my opinion, it all boils down to 3 major points:

1) Fast economic growth in these countries.

2) Transition from Seller’s market to Buyer’s market as customers become more aware and demanding.

3) Low penetration of new and emerging markets due to protectionist policies until the recent past.

There! Now you know :)

Gerry.

(will write more about this soon... This is one of my favourite topics :)