How to Write an Industry Analysis in Your Business Plan

industry analysis in strategic management

Analysts use various tools, both technical and fundamental, to examine these aspects. One such concept dealing with investigating the company’s environment is industry analysis. Risks include economic downturns, increased competition, and fluctuations in coffee prices.

  1. Table 6.2 give an example of a number of sources of competitive advantage for selected worldwide products.
  2. Many of these factors have actually been discussed, and these are summarised in table 6.1.
  3. This might overlook the unique competitive scenarios in different sectors and the increasing importance of the nontraditional strategies involved in digital transformation and platform-based competition.
  4. The competitive position of the industry is very important to the would be global marketer.
  5. A situational analysis should examine the external and internal environment that impact a business’s performance.

#2 Broad Factors Analysis (PEST Analysis)

This approach not only advances competitive positioning but also solidifies the company’s market presence. Such innovative strategies underscore the value of enhancing traditional industry analysis with cutting-edge technologies. Industry analysis is a market assessment tool used by businesses and analysts to understand the competitive dynamics of an industry. Knowing how to capture that market share is essential to a company’s success. But before a business can successfully target an untapped market, it should understand its strengths and weaknesses.

This is not an offer to buy or sell, or a solicitation of an offer to buy or sell, any security, and no buy or sell recommendation should be implied. Industry analysis is equally important to companies as well as external investors. Comparative advantage is the ability of one country to achieve a lower production ratio, under total specialisation, in one commodity, compared to that commodity in another country. However it has maintained or increased its export of high value products (boneless cute, canned beef, frozen beef) which now account for over 80% of export value. Its export value is now near the $800 million mark although only 10% of its total agricultural exports. D) complementary supply – “off season”, meeting production shortfalls because of weather, disease and so on.

A strength, weakness, opportunity, threat (SWOT) analysis is a useful tool to identify how capable your business is of capitalizing on opportunities. industry analysis in strategic management A Go-To-Market (GTM) strategy template is a framework used to plan and execute the launch of a new product or service into the market. It outlines the key elements of the GTM strategy, including target market definition, value proposition development, channel selection, pricing strategy, marketing and sales tactics, and launch timeline. By following a GTM strategy template, businesses can streamline their launch efforts, maximize industry impact, and accelerate revenue growth.

What are the top industry analysis tools?

A Unique Selling Proposition (USP) analysis is a strategic exercise used to identify and describe the unique benefits or advantages that set a product, service, or brand apart from its competitors. It involves assessing the key features, attributes, or value propositions that differentiate the offering and resonate with target customers. By clarifying and communicating its USP, a business can effectively position itself in the industry and attract customers who value its distinctiveness. Industry analysis is a thorough look at different aspects of a specific business sector.

Importance of Industry Analysis in Business

  1. Customer loyalty more often also gives rise to competition in the industry.
  2. A second role relates to the coordination of activities across countries to gain leverage say, of know how.
  3. Malaysia attempted to break into the cocoa industry, but did not achieve success because the cocoa was the wrong type and the product could not be absorbed into the world market.
  4. New technologies also expand capabilities, enable new business models, create higher-value products, or dramatically improve productivity.
  5. Once you have completed these steps, you can align your industry analysis with your corporate strategy by using them to inform and support each other.
  6. Maps reveal ideal positions to target and gaps or clusters in the market.

PEST analysis is a useful framework for analyzing the external environment. An analysis can provide insight into where your business stands in the current market, what is working, what can improve, and opportunities to capitalize on and grow. This increases the cost of final products, making them difficult to afford. The concept of SWOT is not just applicable to industry analysis but to any decision that one needs to take. Describe, with examples, a market leader, market challenger, market follower, market flanker and copy – adapt strategy.

industry analysis in strategic management

Analyzing industry suppliers reveals supplier power, which impacts profit margins. Suppliers with significant negotiating leverage extract higher prices, lowering profitability. Factors like industry concentration, differentiation, switching costs, and substitution threat determine supplier power. A highly concentrated supply base with few large companies indicates potential supplier strength. A situational analysis should include the internal and external factors that affect a business, and a 5C approach may be the simplest. The 5Cs are company, customers, competitors, collaborators, and climate.

For example, in the beverage industry, soda companies compete with bottled water and energy drink producers. You should also review competitor ads, promotions, product placements, and financial data to learn about their profits and target consumers. Don’t forget to tap into secondary sources like government stats, marketing reports, and journal articles for additional insights. Start with researching the background of your industry or a specific subsection of it.

Regulatory changes and evolving consumer preferences may also impact operations. Strategic planning and high-quality standards will be crucial for long-term success. In the retail industry, if a supermarket chain represents a significant portion of sales for multiple suppliers, it can negotiate lower prices, demand higher quality, or secure additional services and discounts. Combine the external research you’ve done with the internal analysis of a SWOT in order to generate a good list of strengths, weaknesses, opportunities and threats. Consider the SWOT as your summary of how and why your company would perform in a certain way when operating in the industry.

This industry-centric view may not fully capture how distinct company characteristics can change the game, not just play within an industry’s preset rules. Meanwhile, in “mild” industries, such as commercial aircraft manufacturing, there are weaker forces. Here, low supplier bargaining power, a minimal threat of new entrants, and a lack of direct substitutes (like commercial aircraft for long-distance travel) help form a sector more conducive to higher profits.

Examples are given to reinforce the theory and the chapter finishes by looking at “outsourcing” as an important competitive strategy. Models like Porter’s 5 Forces, SWOT analysis, and PESTEL analysis are effective tools for conducting an industry analysis for your own business. If writing plans yourself is challenging, digital tools are available to help automate the process and ensure accuracy. Collect data from industry reports, competitor advertisements, financial data, government statistics, trade associations, and marketing reports.